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Farm Status in British Columbia - Understanding the Regulation

BC Assessment Act s. 23
BC Reg. 411/95 Classification of Land as a Farm Regulation

Was Your Farm Status Revoked?

If your farm status has been revoked in the past year, you may be able to retroactively get it back, depending on the reason you lost it.  If it was revoked because you didn't follow your development plan, or you didn't meet your expected harvest date, but you did meet other requirements of the Farm Regulation, then your farm status was revoked in error.  When your property's assessment classification is wrong due to an error, then according to s. 12(4) of the Assessment Act, "the assessor may, at any time before December 31 of the year following completion of the assessment roll under section 3, correct errors and omissions in a completed assessment roll by means of entries in a supplementary assessment roll."

If your farm status was revoked prior to the past year but after 2007, it is unclear whether BC Assessment will correct the assessment roll.  If you get no satisfaction talking to them, contact your MLA.

Classifying Land as a Farm

When a property is classified as farm in BC, the property value is assessed at rates set by the provincial government.  The assessed value is lower than the assessed value for residential, commercial or industrial land.  This results in lower property taxes.  This is one of the methods used by the BC government to encourage farming.  The Classification of Land as a Farm Regulation (the "Regulation") is continually revised in order to ensure the farm assessment process is fair, equitable and streamlined.

We own this website, and also have a small 5 acre Christmas tree farm on Vancouver Island.  At the end of 2013, with tens of thousands of dollars of Christmas tree inventory growing at various stages of maturity on our property, and having sales every year since 2003, we were told our property was being reclassified as residential.  The reason given by BC Assessment was that "the income requirement has not been met".  We read the Regulation, and realized that BC Assessment was wrong in removing our farm status.

The BC Assessment decision was appealed, with the first stage being the Property Assessment Review Panel (PARP).  One must file a "complaint" to PARP by January 31st in order to appeal an assessment.  Unfortunately, the PARP members don't have specialized knowledge of the Regulation, and therefore agreed with BC Assessment instead of not offering an opinion.  The next step was an appeal to the Property Assessment Appeal Board (PAAB).  The PAAB member reviewing our case was a lawyer, and his decision was reviewed by a senior member of PAAB.  They agreed with BC Assessment, even though BC Assessment were arguing their case based on s. 11 (Declassification) of the Regulation that was repealed in 2007.

We were convinced we were right, so we continued on to BC Supreme Court.  We were not represented in court by a lawyer, because this would have cost at least 2x as much as the property tax we could recover.  We spent 1 1/2 days in court arguing our case, and the judge ruled in our favour.  The judge stated "Both the Act and the Farm Regulation are clear that the Assessor must classify land as a farm where the requirements are met, but nowhere among these requirements is an owner required to follow or in fact meet the projected harvest date of a development plan." "The Board confirmed the assessment of the Applicants' Property through the lens of a repealed provision of the Farm Regulation.  This decision was erroneous in law and unreasonable."

This whole process took 2 years, and was extremely time consuming and stressful.

The BC Supreme Court decision is Kelt v. British Columbia (Assessor of Area #04 - Central Vancouver Island), 2015 BCSC 1475.

The Vancouver law firm Bull Housser Tupper published the article The Harvest Date that Never Was: Property Tax Assessment of Developing Farms.  However, since Bull Housser Tupper merged with Norton Rose Fulbright, this article is no longer available.

The law firm Miller Thomson included an analysis of our case in the LexisNexis® Agricultural Law Netletter Issue 331 (pdf).

There is a lot more to this case than is shown in the decision and the resulting articles.  We asked the court 12 questions, only one of which was answered, because once the answer to one was "yes", there was no need to answer the others.

Classification of Land Under Development as a Farm (Regulation s. 8)

To qualify a property as land under development for a farm for the upcoming year, one must:

  1. submit an application for classification of land as a farm to BC Assessment by October 31st
  2. for qualifying agricultural products that require planting,
    1. submit a farm development plan with the application, which must be approved by the assessor,
    2. have a sufficient area prepared and planted to meet gross annual value requirements when harvesting occurs, or
    3. show that it will be planted by June 21st of the following year, and that a viable farm will be established
    4. for products that require 7 to 12 years after planting before harvesting occurs, also have a reasonable expectation of profit from farming.
  3. for livestock that will require one year to establish before sales occur:
    1. have the buildings, structures and fencing completed,
    2. have the required livestock purchased and present, and
    3. show that the farm operation will meet gross annual value requirements by October 31 of the following year.
  4. see the Regulation for greenhouse or mushroom operations, and aquaculture operations.

Notes:

  1. BC Assessment MUST classify land as farm if the requirements of the Regulation are met.
  2. Once a farm development plan has been approved, it does not have to be followed, but the remaining requirements of the Regulation still must be met.
  3. It is not necessary to meet the projected harvest date of the development plan, but the remaining requirements of the Regulation still must be met.
  4. If your property consists of more than 1 title, make sure you have farming activity on each property.

Classification of Land as a Farm (Regulation s. 5)

At some point your farm under development will transition to a farm.  If you have a 5 acre farm, the requirements for farm status are:

  1. sales every year (exception for horse rearing - sales every 2nd year), and
  2. meet gross annual value requirements by
    1. having sales of $2,500 every 2nd year, or
    2. having gross annual value of $2,500 every year  or every 2nd year (this is unclear in the Regulation) by including unrealized value,.

To be safe, it's best to ensure that you meet the $2,500 gross annual value every year.  We are going to try to get confirmation of the meaning of this part of the Regulation from the Ministry of Community, Sport and Cultural Development, or from our MLA.

Gross Annual Value

Gross annual value is the total of:

  1. sales (farm gate amounts) of qualifying agricultural products produced on the farm during the year, plus
  2. the unrealized value (monetary worth) of qualifying agricultural products or livestock that are produced/raised on the farm during the year and are not sold, but are available and offered for sale or held for sale during the 12-month period following that reporting period.

BC Assessment Documentation re Farm Status

BC Assessment produces many documents that are supposed to help people determine the requirements for having land classified as a farm.  Unfortunately, many of these documents are incorrect and misleading.

Examples as at November 20, 2015:

Classifying Farm Land - this web page indicates that "income" amounts are required, where it should say "gross annual value" amounts, which include unrealized value.  The Regulation does not include the word "income" except as part of the phrases "income tax year" and "Income Tax Act".  The Classifying Farm Land information makes no mention of unrealized value.  BC Assessment previously had the Fact Sheet - Classifying Farm Land (pdf), but this is no longer available on their website.

Farm Classification in British Columbia Guide Book (2015) (pdf) - this is a copy of the Guide Book which we previously downloaded, as it appears to be unavailable now on the BC Assessment website.

bulletThis guide also uses the term "income" in its comments at least 28 times when it should be referring to "gross annual value" or "farm gate amounts".
bulletThe comments on page 16 of the guide beside s. 5(2) state "Unrealized value is applicable to crops or livestock raised for human or animal consumption."  The Regulation does not contain this wording.  S. 5(2)(a) of the Regulation states that unrealized value applies to "qualifying agricultural products".  The Regulation does use the term "for food for human or animal consumption", but only in relation to the unrealized value of livestock.

Farm Classification in British Columbia Guide Book (2016) - this is the revised guide book on the BC Assessment website.  It now contains the word "income" 36 times (besides in the phrase "income tax", which actually does appear in the regulation).  The reference beside s. 5(2) has been revised to "Unrealized value is applicable to livestock raised for human or animal consumption and to crops".  This is correct as long as they interpret "crops" to mean "qualifying agricultural products".

General Application for Farm Classification - scroll down to Farm Forms

The title for unrealized value information says "Unrealized value from products held for sale and to be sold within the next year", while it should refer to products "available for sale and held for sale during the 12-month period following that reporting period".  This does not mean they have to be sold in that 12-month period.

We will be talking to BC Assessment and our MLA regarding the BC Assessment documentation which needs to be corrected.

Revised: January 02, 2017

 

 

 

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