Canada v. Larsen
A-570-98
Noël J.A.
29/10/99
7 pp.
Appeal from Tax Court's decision allowing appeal from reassessment for 1994 taxation year-Respondent, three siblings giving lumber company right to enter land, remove timber for price per cubic metre of timber removed-Eventually $644,300 divided equally amongst siblings-Land used as agricultural land for ranching purposes before, after timber removed-On tax return respondent taking position transaction capital in nature, right disposed of under contract "qualified farm property"-Minister relying on Income Tax Act, s. 12(1)(g) to reassess respondent's share of proceeds as income-S. 12(1)(g) requiring inclusion as income as amount received dependent on use of or production from property-Tax Court holding transaction giving rise to capital receipt as amounts received not dependent on use of or production from property-Holding property disposed of "qualified farm property" within s. 110.6(1) entitling respondent to enhanced capital gain deduction-According to s. 110.6(1) "qualified farm property" real property used in business of farming-Appeal dismissed-Case law consistently excluding from s. 12(1)(g) receipts arising from one-time contract for removal of timber-No basis for disturbing line of authority-Right to remove timber by severance incorporeal hereditament in land constituting real property-Based on s. 110.6(1), sufficient timbered property being used for farming at relevant time-As standing timber itself real property, integral part of farm property, sufficient to bring it within ambit of s. 110.6(1)-Income Tax Act, S.C. 1970-71-72, c. 63, ss. 12(1)(g), 110.6(1) "qualified farm property" (as enacted by S.C. 1986, c. 6, s. 58; 1991, c. 49, s. 81).