10 November 1989 Income Tax Severed Letter AC58654 - Roll-over of Farm Property to Child

19(1)                            5-8654
                                        A.B. Adler
                                        (613) 957-8962

November 10, 1989

19(1)

Your letter dated June 30, 1989 and addressed to Mr. Paul Fuoco, Chief, Personal and General Section, was recently referred to this office for reply.

You indicated that your client would like to create a testamentary trust under his will to hold a farm property for the benefit of two of his children, one of whom will continue to farm the property. Further, you wish to put a provision in the will to enable the trustees to distribute the farm property to the children within 36 months after the death of your client if such a distribution is appropriate. You wish to know if such a transfer is in fact done pursuant to the discretionary powers contained in the will whether the transfer will qualify for purposes of subsection 70(9) of the Income Tax Act ("Act").

Where a discretionary power in a will is in fact exercised within 36 months of the date of death of an individual and the property in question is transferred indefeasibly to an individual, provided that the other requirements of subsection 70(9) of the Act are met, we would except that the transfer will qualify for the purposes of subsection 70(9) by virtue of subsection 248(8) of the Act.

The above comments are an expression of opinion only and are not binding upon the Department. As indicated in paragraph 23 of our Information Circular No. 70-6R we do not provide written opinions on proposed transactions.

Yours truly,

for Director Financial Industries Division Rulings Directorate