A 70-acre property of the taxpayer consisted of 25 acres of workable farmland, and 45 acres of forest which had never been used in farming. Regarding the farming use test in s. 110.6(1.3)(a)(ii)(A), CRA indicated that this test effectively required that “in at least two years while the Property was owned by one or more persons referred to in subparagraph 110.6(1.3)(a)(i) … more than 50% of the Property must have been used more than 50% of the time in farming or fishing.” CRA went on to state:
Where in a particular year, more than 50% of a particular property is being used for some purpose other than farming or fishing or is otherwise vacant or idle, generally speaking, such non-farming or fishing use would result in the entire property not being considered as being used principally in the business of farming or fishing in Canada for the year. For example, land which is not used for farming due only to the presence of trees would generally not be excluded in determining whether more than 50% of the property is used in farming or fishing.
However, it may be the case that a portion of the total area of a particular parcel of land is not suitable for any use (i.e., a portion may be absolutely useless for any purpose). … [G]enerally, in such a situation … the unusable portion could be excluded in determining whether more than 50% of the property is used in farming or fishing … .