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Land Transfer Tax Act
Loi sur les droits de cession immobilière

R.R.O. 1990, REGULATION 697

EXEMPTION(S) — FOR CERTAIN CONVEYANCES OF FAMILY FARMS OR FAMILY BUSINESSES

Consolidation Period: From October 10, 2008 to the e-Laws currency date.

Last amendment: O. Reg. 350/08.

This Regulation is made in English only.

1. (1) In this Regulation,

“active business” means a business that is not,

(a) farming,

(b) the leasing of real property, or

(c) a business that, within the meaning of the Income Tax Act (Canada), is a personal services business or a specified investment business;

“child” means child as defined in subsection 1 (1) of the Family Law Act;

“family business corporation” means a corporation that is a Canadian-controlled private corporation, within the meaning of the Income Tax Act (Canada), all of whose issued shares other than directors’ qualifying shares are owned by members of the family of an individual;

“farming” includes tillage of the soil, the breeding, raising or grazing of livestock of all kinds, the raising of poultry and the production of poultry products, fur farming, dairy farming, fruit growing, the growing of food for human consumption or for the feeding of livestock and the keeping of bees, but does not include the leasing out of land where the lessor is not entitled to share in the crops, livestock or other commodities raised or produced on the land or the proceeds of the sale of such crops, livestock or other commodities so raised or produced;

“farming assets”, of a family farm corporation, means,

(a) land, buildings, equipment, machinery and livestock that are used chiefly in farming by the corporation,

(b) any right or licence granted or issued under any Act of the Legislature that permits or regulates the production or sale of any commodity or thing produced, raised or grown through farming,

(c) the building in which a shareholder or one or more members of his or her family reside who are engaged in farming if that building is on land that is used or is contiguous to land used in farming by that shareholder or those members of his or her family,

(d) shares in another family farm corporation, and

(e) trade accounts receivable, supplies and inventory of commodities or things produced, raised or grown through farming;

“issued shares”, of a corporation, includes unissued shares, the issuing of which has been authorized by a properly passed resolution of the corporation as consideration for the conveyance to it of land in respect of which exemption from tax is claimed under this Regulation;

“members of the family” means, with respect to an individual,

(a) the individual,

(b) the individual’s spouse,

(c) the individual’s child,

(d) the individual’s father, mother, brother or sister or any spouse or descendant of such brother or sister,

(e) the brother or sister of the individual’s father or mother or any descendant of any such brother or sister,

(f) the father, mother or any brother or sister of the individual’s spouse or any descendant of any such brother or sister,

(g) the individual’s son-in-law or daughter-in-law,

(h) the individual’s grandfather or grandmother,

(i) the individual’s grandchild or great-grandchild or the spouse of any such grandchild or great-grandchild, or

(j) a corporation all of the issued shares of which except for directors’ qualifying shares are owned by an individual or individuals, each of whom is related to the individual to whom the expression is being applied in the manner described in any of clauses (a) to (i);

“taxation year” of any corporation is its taxation year for the purpose of the Income Tax Act (Canada). R.R.O. 1990, Reg. 697, s. 1 (1); O. Reg. 118/00, s. 1; O. Reg. 121/00, s. 1; O. Reg. 87/04, s. 2; O. Reg. 320/05, s. 1; O. Reg. 567/06, s. 1; O. Reg. 350/08, s. 1 (1-4).

(2) For the purposes of this Regulation, a corporation is a family farm corporation at the time of a conveyance of land to or from the corporation if all of the following conditions are satisfied:

1. All of the issued shares of the corporation at the time of the conveyance, other than directors’ qualifying shares, are owned by one or more persons, each of whom is,

i. a member of the family of each transferor, if the conveyance of land is to the corporation, or

ii. a member of the family of each transferee, if the conveyance is from the corporation to one or more transferees.

2. At least 95 per cent of the value of the corporation’s assets at the time of the conveyance, including the land being conveyed, is attributable to farming assets.

3. If a member of the family of a transferor referred to in subparagraph 1 i or a transferee referred to in subparagraph 1 ii is a corporation, at least 95 per cent of the value of the total assets of that member of the family is attributable to farming assets. O. Reg. 350/08, s. 1 (5).

2. (1) Section 2 of the Act does not apply to a conveyance of land from an individual or individuals, each of whom is a member of the family of the other to a corporation which is, at the time of registration of such conveyance, a family farm corporation provided that,

(a) prior to such conveyance the land was used predominantly in farming which was carried on exclusively by an individual or individuals, each of whom is a member of the family of each transferor of the land being conveyed; and

(b) the land is being conveyed for the principal purpose of enabling the transferee to continue the farming on such land under the direction of a person or persons, each of whom is a member of the family of each transferor of the land being conveyed. R.R.O. 1990, Reg. 697, s. 2 (1); O. Reg. 118/00, s. 2; O. Reg. 121/00, s. 2; O. Reg. 87/04, s. 3; O. Reg. 320/05, s. 2; O. Reg. 567/06, s. 2.

(2) If an exemption authorized by this section is claimed, the form approved by the Minister shall be completed by an officer of the transferee, attached to the conveyance being tendered for registration and filed with the Minister or the collector. O. Reg. 489/00, s. 1.

2.1 (1) Section 2 of the Act does not apply to a conveyance of land from one or more individuals, each of whom is a member of the family of the other, to one or more individuals, each of whom is a member of the family of each transferor, if,

(a) prior to the conveyance, the land was used predominantly in farming which was carried on exclusively by one or more individuals, each of whom is a member of the family of each transferor of the land being conveyed; and

(b) the land is being conveyed for the principal purpose of enabling one or more individuals, each of whom is a member of the family of each transferor of the land, to continue the farming on the land. O. Reg. 87/04, s. 4; O. Reg. 320/05, s. 3; O. Reg. 567/06, s. 3 (1).

(1.1) Section 2 of the Act does not apply to a conveyance of land to one or more individuals by the personal representative or personal representatives of the estate of a deceased individual if that section would not, by virtue of subsection (1), have applied to a conveyance of the same land to the same individual or individuals by the deceased individual immediately before his or her death. O. Reg. 567/06, s. 3 (2, 3); O. Reg. 350/08, s. 2.

(2) If an exemption under this section is claimed, each transferee must complete the form approved by the Minister and the form must be attached to the conveyance being tendered for registration and filed with the Minister or the collector. O. Reg. 87/04, s. 4; O. Reg. 567/06, s. 3 (4).

2.2 (1) Section 2 of the Act does not apply to a conveyance of land from a corporation that is a family farm corporation at the time of registration of the conveyance to one or more individuals, each of whom is a member of the family of the other individual if the following conditions are satisfied:

1. Before the conveyance, the land was used predominantly in farming that was carried on exclusively under the direction of one or more persons, each of whom is a member of the family of each individual who is a transferee of the land being conveyed.

2. The land is being conveyed for the principal purpose of enabling one or more individuals to continue farming on the land.

3. Each person who owns shares of the family farm corporation, other than directors’ qualifying shares, is a member of the family of each of the individuals referred to in paragraph 2. O. Reg. 350/08, s. 3.

(2) A conveyance referred to in subsection (1) may be registered without the payment of tax under section 2 of the Act if each transferee completes the form approved by the Minister, the form is attached to the conveyance tendered for registration and the form is filed with the Minister or the collector. O. Reg. 350/08, s. 3.

3. (1) Section 2 of the Act does not apply in respect of a conveyance of land from one or more individuals, each of whom is a member of the family of the other, to a corporation that is a family business corporation on the day the conveyance is registered if the following conditions are satisfied:

1. Before the conveyance, the land was used predominantly in the operation of an active business that was operated exclusively by one or more individuals each of whom is a member of the family of each transferor of the land.

2. At the time the conveyance is registered, all of the issued shares of the family business corporation other than directors’ qualifying shares are owned by one or more persons each of whom is a member of the family of each transferor of the land.

3. The principal purpose for the conveyance is to enable the family business corporation to continue to operate the active business on the land under the direction of one or more persons each of whom is a member of the family of each transferor of the land.

4. The family business corporation has a taxable income, as determined under the Income Tax Act (Canada), for its first taxation year ending after the day the conveyance is registered of less than $1.5 million.

5. The family business corporation derives at least 75 per cent of its gross revenue from an active business carried on in Canada during its first taxation year ending after the day the conveyance is registered.

6. If any shareholder of the family business corporation on the day the conveyance is registered is a corporation,

i. it derives at least 75 per cent of its gross revenue from an active business carried on in Canada during its first taxation year ending after the conveyance is registered, and

ii. its taxable income, as determined under the Income Tax Act (Canada), for that taxation year is less than $1.5 million. O. Reg. 350/08, s. 4.

(2) Despite subsection (1), a conveyance in respect of which it is reasonable to believe that tax may not be payable by reason of this section may be registered without the payment of tax only if,

(a) the corporation provides security for the tax that is satisfactory to the Minister; and

(b) the corporation provides to the Minister a form approved by the Minister and completed by an officer of the corporation indicating the conditions described in subsection (1) that are satisfied at the time the conveyance is registered. O. Reg. 350/08, s. 4.

(3) Subject to subsection (4), if tax is paid in respect of the conveyance or security is provided under subsection (2), the Minister shall refund the tax or return the security, as applicable, if,

(a) the corporation has provided to the Minister, in a form approved by the Minister and completed by an officer of the corporation, written confirmation that all of the conditions under subsection (1) have been satisfied; and

(b) the Minister is satisfied that this section applies to the conveyance. O. Reg. 350/08, s. 4.

(4) If, as a result of information obtained by the Minister, the Minister determines before the security is returned that any of the conditions set out in subsection (1) have not been satisfied in accordance with this section, the Minister may enforce the security for the payment of the tax and interest accrued under the Act. O. Reg. 350/08, s. 4.