HST and the Sale of Farmland in Ontario: What You Need to Know

In Ontario, the sale of farmland is generally subject to Harmonized Sales Tax (HST). However, there are specific exemptions and conditions that may apply, depending on the nature of the transaction. Understanding these rules can help ensure compliance and potentially reduce tax liabilities.

General Rule

The sale of farmland is typically taxable under HST regulations.

Key Exemptions

  1. Sales to Related Individuals: If farmland is sold to a related individual who will use it for personal purposes, the sale may be exempt from HST.

  2. Farming Business Transfers: If the sale is part of a transfer of a farming business, both the buyer and seller can jointly elect to exempt the transaction from HST by completing Form GST44.

  3. Residential Property Included: When farmland includes a residence, the sale is treated as two separate transactions:

    • The portion with the residence is usually exempt from HST.

    • The remaining farmland is typically taxable.

Requesting an Advance Ruling from CRA

To confirm whether HST applies to your farmland sale, you can request an advance ruling from the Canada Revenue Agency (CRA). Here’s how:

  1. Submit a Written Request: Provide all relevant details about the transaction, including the parties involved, property details, and intended use of the farmland.

  2. Use CRA Resources: Complete the Advance Income Tax Ruling Request Checklist (Appendix A) and Template (Appendix A.1) as outlined in CRA’s Information Circular IC70-6R12.

  3. Processing Time: Advance rulings can take several weeks to months, depending on complexity and CRA workload.

  4. Send Your Request: Submit your completed request to the CRA’s Income Tax Rulings Directorate using the contact information provided in IC70-6R12.

Final Thoughts

Navigating HST rules for farmland sales can be complex. Consulting with a legal or tax professional can help ensure that your transaction complies with applicable laws while maximizing any available exemptions.For more information or assistance with your farmland sale, contact Carson Law today!

Disclaimer

The content on this web site is provided for general information purposes only and does not constitute legal or other professional advice or an opinion of any kind. Users of this web site are advised to seek specific legal advice by contacting members of Carson Law, Carson IP, or their own legal counsel regarding any specific legal issues. Carson Law does not warrant or guarantee the quality, accuracy or completeness of any information on this web site. The articles published on this web site are current as of their original date of publication, but should not be relied upon as accurate, timely or fit for any particular purpose.

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