G. Thornley (613) 957-2101
JUN -6 1988
XXXX
This is in reply to your letter of March 9, 1988 addressed to Taxation Centre, Regina, Saskatchewan that was received in this office on April 21, 1988.)
XXXX
As advance income tax rulings are only given in respect of proposed transactions subject to the guidelines in Information Circular IC 70- 6R (a copy of which is enclosed for your information), we provide the following by way of general comments only.
Our Comments
Qualified farm property is defined to include real property owned by a taxpayer or his spouse provided it was used in the business of farming in Canada by;
a) The taxpayer, his spouse or any of his children;
b) A family farm corporation; or
c) A family farm partnership.
In addition, the land must have been used in the business of farming;
a) In the year the property was disposed of by the taxpayer; or
b) In at least five years during which the property was owned by the taxpayer, his spouse or his children.
Whether or not a taxpayer has carried on a farm business is a question of fact. However, assuming that XXXX has in fact carried on a farming business in Canada on the farmland involved and did so for more than the minimum five year period required, it would appear that his farmland will qualify as "qualified farm property" as described in subsection 110.6(1) of the Income Tax Act. Thus on a subsequent disposition to his XXXX or a third party he should qualify for the capital gains deduction referred to earlier.
We trust our comments will prove helpful.
Yours truly,
for Director Small Business and General Division Specialty Rulings Directorate Legislative and Intergovernmental Affairs Branch