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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

Historical version for the period December 15, 2006 to October 9, 2008.

Disclaimer: This consolidation is not an official copy of the law because it is affected by one or more retroactive provisions which have not been incorporated into it. For information about the retroactive provisions, see O. Reg. 350/08, subsection 5 (2).

Last amendment:  O. Reg. 567/06.

This Regulation is made in English only.

1. (1) In this Regulation,

“active business”, carried on by any person, means those businesses described in the definition of “active business” in section 125 of the Income Tax Act (Canada) but does not include farming or the leasing of real property;

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

“family business corporation” means a corporation in which, at the date of registration of any conveyance with respect to which the expression is being applied, all of the issued shares except for directors’ qualifying shares are owned by a person or persons, each of whom is a member of the family of each transferor of the land being conveyed, and, where any of such persons is a corporation, the provisions of clauses 3 (1) (c) and (d) are applicable to such corporation;

“family farm corporation” means a corporation in which, at the date of registration of any conveyance with respect to which the expression is being applied,

(a) all of the issued shares except for directors’ qualifying shares are owned by a person or persons, each of whom is a member of the family of each transferor of the land being conveyed, and, where any of such persons is a corporation, 95 per cent of the value of the assets of such corporation are farming assets, and

(b) 95 per cent of the value of the assets are farming assets;

“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 Corporations Tax Act.  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.

(2) For the purposes of determining the percentage referred to in clause (b) of the definition of “family farm corporation” in subsection (1), the value of the interest in the land being conveyed shall be included as an asset of the corporation.  R.R.O. 1990, Reg. 697, s. 1 (2).

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 those sections 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).

(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).

3. (1) Subject to subsections (2) and (3), 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 family business corporation provided that,

(a) prior to such conveyance the land was used predominantly in the operation of an active business which was operated exclusively by an individual or individuals, each of whom is a member of the family of each transferor of the land being conveyed;

(b) the land is being conveyed for the principal purpose of enabling the transferee to continue the operation of such business on the 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;

(c) for its taxation year ending next following the date of registration of any conveyance with respect to which the expression is being applied, qualifies for a deduction under subsection 125 (1) of the Income Tax Act (Canada) notwithstanding that no deduction is allowed under that subsection by reason only that the amount determined under paragraph 125 (1) (a) or (b) of that Act is nil for such taxation year; and

(d) for its taxation year ending next following the date of registration of any conveyance with respect to which the expression is being applied, derives at least 75 per cent of its gross income from an active business carried on in Canada.  R.R.O. 1990, Reg. 697, s. 3 (1); O. Reg. 118/00, s. 3; O. Reg. 121/00, s. 3; O. Reg. 87/04, s. 5; O. Reg. 320/05, s. 4; O. Reg. 567/06, s. 4.

(2) A conveyance to which subsection (1) may be applicable may be registered without the payment of tax provided that,

(a) security for the tax in a form satisfactory to the Minister is furnished; and

(b) the form approved by the Minister is completed by an officer of the transferee described in the conveyance, indicating the requirements described in subsection (1) that have been met, and is given to the Minister.  R.R.O. 1990, Reg. 697, s. 3 (2); O. Reg. 489/00, s. 2 (1).

(3) Where, after the expiration of its taxation year ending next following the registration of a conveyance described in subsection (1), the transferee of the conveyance claims that it is a conveyance to which subsection (1) applies and in respect of which no tax is payable, the form approved by the Minister shall be completed by an officer of the transferee and given to the Minister.  R.R.O. 1990, Reg. 697, s. 3 (3); O. Reg. 489/00, s. 2 (2).

(4) Subject to subsection (5), where tax has been paid or security has been furnished with respect to the registration of a conveyance to which the Minister is satisfied that subsection (1) applies, such tax or security shall be returned by the Minister to the person who paid such tax or furnished such security.  R.R.O. 1990, Reg. 697, s. 3 (4).

(5) Where, as a result of information furnished to the Minister under the Corporations Tax Act or furnished to the Minister by the transferee or by any other person, the Minister is satisfied that the transferee has not satisfied the requirements of clauses (1) (c) and (d), the Minister may enforce any security furnished to the Minister under subsection (2) for the payment of the tax and such interest thereon as is owing.  R.R.O. 1990, Reg. 697, s. 3 (5).