Do you qualify for a land tax exemption?

Gary Sliworsky

A while back the provincial government brought in a measure that was beneficial to farm families by exempting the land transfer tax on farm land that changes ownership between members of the same family. This measure helps pass on the farming tradition to future generations and build a stronger, more prosperous rural economy.
Ordinarily, a transfer of farmed land is subject to land transfer tax, which can range from 0.5 to 2 per cent, depending on the value of the property.
Exemptions may apply when:
·there is a transfer of farmed land to a family farm corporation, as long as the corporation continues to farm the land under the direction of the transferor or his/her relatives, and the corporation shareholders are related.
·the transfer of farm land is between related individuals and it continues to be farmed.
Eligible family members include: spouse, child, mother, father, brother or sister and spouse/ descendants, cousins and descendants. Grandparents, certain spouse’s relatives and a transferor’s same-sex spouse are also eligible family members. This is consistent with the current exemption for transfers into a family farm corporation.
The person or people who buy/receive the transferred land must be related to the transferor and either they or their relatives must continue to farm the land. In the case of a transfer to a family farm corporation, all the shares must be owned by people who are related to the transferor, and the corporation must continue to farm the land under the direction of one or more family members. 95 per cent of the assets of the family farm corporation must be farming assets.
Further details of the exemption are outlined in Tax Bulletin LTT2-2004 Exemption for Certain Transfers of Farmed Land
To obtain Tax Bulletin LTT2-2004, which is available at www.trd.fin.gov.on.ca, or contact:
Ministry of Finance
Motor Fuels and Tobacco Tax Branch
Land Taxes Section
33 King Street West
P.O. Box 625
Oshawa, Ontario L1H 8H9
Tel: 905-433-6361
Fax: 905-436-4511