2015-0564611E5 Definition of farming

Principal Issues: Whether activities such as raising/breeding rodents to be sold as pets and food for reptiles and other animals would be considered farming.

Position: Possibly.

Reasons: See analysis

Author: D'Angelo, Sandro
Section: 248(1) - definition of farming

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                                                                                                                                                                              2015-056461
                                                                                                                                                                              S. D’Angelo

March 13, 2015

Dear XXXXXXXXXX:

Re: The definition of “farming” under the Income Tax Act (the “Act”)

This is in reply to your correspondence of January 8, 2015, and our telephone conversation (D’Angelo/XXXXXXXXXX) of January 9, 2015, wherein you requested our views whether the breeding of rodents to be sold as pets or as food for reptiles would be considered farming under the Act.

Our Comments

This technical interpretation provides general comments about the provisions of the Act and related legislation (where referenced).  It does not confirm the income tax treatment of a particular situation involving a specific taxpayer but is intended to assist you in making that determination.  The income tax treatment of particular transactions proposed by a specific taxpayer will only be confirmed by this Directorate in the context of an advance income tax ruling request submitted in the manner set out in Information Circular IC 70-6R6, Advance Income Tax Rulings and Technical Interpretations.

Farming is defined in subsection 248(1) of the Act to include the tillage of the soil, livestock raising or exhibiting, maintaining of horses for racing, raising of poultry, fur farming, dairy farming, fruit growing and the keeping of bees.  The courts have held that this definition is not exhaustive and typically one must look to the common, ordinary and generally accepted meaning of the word as well as to the specific activities detailed in the statute.  Accordingly, the ordinary definition of farming is somewhat fluid and the particular activities undertaken by a taxpayer would have to be considered on a case-by-case basis.

Previously, and as described in paragraph 2 of Interpretation Bulletin, IT-427R, Livestock of Farmers, the CRA considered that livestock included any and all animals, (i.e. living organisms which are not plants or bacteria) if they are kept, maintained and bred under controlled conditions for profit.  However, as indicated in technical interpretation 2014-0527651E5, we now consider that meaning to be too broad and we now take a somewhat narrower view of that term based, in part on how the courts have typically interpreted it.  For instance, in Sniderman v. MNR, 89 DTC 232, the tax court stated that livestock “are domestic animals such as cattle and pigs, bred or kept on a farm for use and commercial profit.”

Notwithstanding the above, where a taxpayer’s activities primarily involve the cultivation, raising, or breeding of animals (husbandry) for use as a food source (even from non-traditional food or novel sources), such activities would generally be considered as farming, even though the animals would not be considered as livestock.

Regarding your particular situation, the raising or breeding of rodents could be considered “farming” for purposes of the Act if the primary purpose for such activity is to supply a food source, whether that food source is for animal consumption or human consumption.  However, the raising or breeding of rodents or other animals to be sold for use as pets would not be considered as farming. (footnote 1)

We trust our comments will be of assistance.

Yours truly

Michael Cooke, C.P.A., C.A.
Manager
Business Income and Capital Transaction Section
Business and Employment Division
Income Tax Rulings Directorate
Legislative Policy and Regulatory Affairs Branch

FOOTNOTES

Note to reader:  Because of our system requirements, the footnotes contained in the original document are shown below instead:

1  Partington v. MNR, 91 DTC 347

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