In one of the two examples presented:
Mr. A started renting land from an unrelated person in 1987. In 2000, he and Mrs. A purchased the parcel from the unrelated owner person, and in 2004, they started renting the parcel of land to non-eligible persons for purposes of s. 73(3)(c) until its transfer to a child in 2020. Would the principal-use test in s. 73(3)(c) be satisfied even though the 17 years of use of the land in a farming business in which Mr. A was actively engaged on a regular and continuous basis (as contrasted to the subsequent 16-year period) was a period during much of which Mr. A was merely a renter of the land?
CRA indicated:
[T]he “principally” test would generally be met where the farming or fishing use is more than 50% of the years while the test would generally not be met where the farming or fishing use is less than 50% of the years. …
[F]or [these] purposes … the period of active farming or fishing by one or more eligible persons (i.e., the taxpayer, the taxpayer’s spouse (or common-law partner), a child of the taxpayer, or a parent of the taxpayer), does not have to coincide with the period of ownership [of the particular property by the taxpayer.