A Justice of the Tax Court of Canada has concluded that a dairy farmer, who sold his land to a developer and then leased it back, did not have the benefit of the rollover provisions under the Income Tax Act, and that the dairy farmer must pay tax on the capital gain he realized from the sale of the land. The farmer had operated the dairy farm with his mother prior to her death. In order to settle his mother's Estate and the claims of his other siblings, the farmer had to sell the mother's land, as well as his own to the developer. The settlement with the Estate and the sale to the developer permitted the farmer to carry on dairy operations using the same land, the same equipment, feed and dairy quota as he had prior to his mother's death, but using leased lands, rather than lands he owned. From the decision, it appears that this is the first case to consider leased lands could be considered as "replacement" property within the meaning of the Income Tax Act. (Livingston v. Canada, CALN/2015-005, [2015] T.C.J. No. 19, Tax Court of Canada)

A Justice of the Tax Court of Canada has dismissed an appeal from the CRA's denial of input tax credits from a farmer's horse race farming activities. The Court observed the farmer had sustained losses in every year between 1991 and 2010 and that the farmer was, on a personal level, enjoying gambling on the sport of kings in his breeding and training activities instead of at a betting window. (Rasmussen v. Canada, CALN/2015-006, [2015] T.C.J. No. 27, Tax Court of Canada)

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