Farm Succession

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What Qualifies as a Farm for Tax Purposes? With Bud Arnold (Ep. 37)

By FromTheSource | April 9, 2026

What actually qualifies as a “farm” for tax purposes, and why does it matter more than most people think?

In this episode, Frankie and Sarah are joined by Bud Arnold, Tax Partner at Baker Tilly, to continue their conversation on Canadian farming tax rules, this time focusing on planning opportunities and how to access preferential tax treatments. This episode highlights how small structural and operational decisions can significantly impact long-term tax outcomes for farm owners and their families.

Frankie and Sarah discuss:

What the CRA considers a “farm” for income tax purposes, and how it differs from property tax or land transfer definitions
Why eligibility depends on who is using the land and how it’s being used
How corporations and partnerships can play a role in qualifying for tax advantages
Common mistakes that can disqualify farmland from the lifetime capital gains exemption
Planning strategies to convert passive rental income into active farming income
Challenges with mixed-use properties, including principal residence vs. farmland allocation
How non-farming assets inside a farm corporation can create issues
Additional considerations, like HST and land transfer tax, when selling or transferring farmland

Resources:

Farm Transfers Under the Income Tax Act: Planning for the Next Generation (Ep. 36)

Connect with Frankie Loreto and Sarah Netley:

Connect with Bud Arnold:

About our Guest:

Bud Arnold is a Tax Partner at Baker Tilly, Elora, with a specialty in agriculture and farming. He works closely with farm owners on tax planning and succession strategies, helping clients navigate complex rules and access available tax advantages within the farming sector.

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Farm Transfers Under the Income Tax Act: Planning for the Next Generation (Ep. 36)

By FromTheSource | March 2, 2026

Farm succession planning is not just about who gets the land; it is about how to transfer it without creating an unmanageable tax bill. This episode explains why farm property is treated differently under the Income Tax Act and how those differences can shape estate and succession decisions.

In this episode, Frankie and Sarah are joined by Jamie Lee, Tax Manager at Baker Tilly Cadian, to walk through the unique tax rules that apply to qualifying farm property in Canada. From rollover provisions to the lifetime capital gains exemption, they break down what farm families need to understand before transferring property to the next generation.

What to expect:

Why farm property rollovers extend beyond spouses to children, grandchildren, and great-grandchildren
How transferring property between cost and fair market value can create planning flexibility
What the “principally used” test means and why 50 percent matters
Key differences between pre 1987 and post 1987 capital gains exemption rules
How the gross revenue test can complicate eligibility
Why rising land values create liquidity concerns at death
How promissory notes are often used in farm transfers
The 36-month holding rule and why timing matters
Additional considerations, including alternative minimum tax, OAS clawback, and potential HST implications
And more!

Connect with Frankie Loreto and Sarah Netley:

About our Guest:

Jamie Lee is a Tax Manager at Baker Tilly Cadian with a growing focus on farm taxation and succession planning. Coming from a farming background herself, she brings both personal understanding and professional expertise to her work with farm clients.

Jamie Lee regularly advises on complex farm tax matters, including rollover provisions, capital gains exemption planning, and intergenerational transfers. She works closely with farm families to help them navigate evolving tax rules while supporting long term continuity and thoughtful succession strategies.

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