GST on property purchase (hobby farm)
We are considering buying a residence that is on 10 Acres and is owned by people who have been growing flowers and selling them to Canadian Tire. The property is zoned minimum 10 acres. The flowers are not the primary source of income. The property has farm status. The property has a residence which is used full time by the owners of the property. Will full GST have to be paid on the purchase of this property?
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david ingram replies:
I don't know from the information given.
The following older answer may help.
My question is: Canadian-specific
QUESTION: I am buying an acreage in BC. I am told that I have to pay GST on the purchase price. Is this because it has farm status? Can I get the GST back?
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david ingram replies;
Farms are tough and depends upon whether it is a working farm and being sold as a working farm or for the personal use of someone. The decision on whether or not to charge GST is the decision of the vendor, not the purchaser. If the vendor decides not to charge and the CRA decides that GST should have been charged, the vendor is liable for the tax because it is assumed that the price included the GST. Therefore, a farmer who was a GST registrant is ALWAYS going to want to charge GST.
There is no general exemption for the sale of farm land
* A Farm Land Transfer to Family Members Exemption (Farming Exemption)
However, there IS a limited exemption on the sale of farm land if:
the property was used by the individual himself and was farmed at any time;
* immediately before transferring the property the property has been farmed; and
* the new use of land must be personal to the individual or to the relative of the individual
*
A similar exemption also extends to the sale by a corporation, partnership or trust with the same criteria as above.
This prevents G.S.T. becoming payable on a deemed change of use of farm land to personal use or the conveyance of farm land to a family member.
We just went through this with a working farm sold to someone who intended to farm it. GST was payable. \
In this case, to defer the GST, you must register as a farm yourself and then, after paying the tax, you will get an input credit and a refund when you file your first return. Recognizing that this can be an immense cash flow problem, the government has come up with form ???? or you can defer the tax by filling in a form ??? . David Stoller, a lawyer in the same building as us at (604) 922-4702
*
can likely give you the name of the form and since he has just finished such a transaction for the seller is likely as good a lawyer as any to help with yours.
His office is at:
801-100 Park Royal South
West Vancouver, BC
V7T 1A2
____________________________________________________________________________
david ingram replies:
I don't know from the information given.
The following older answer may help.
My question is: Canadian-specific
QUESTION: I am buying an acreage in BC. I am told that I have to pay GST on the purchase price. Is this because it has farm status? Can I get the GST back?
---------------------------------------------------------------------------
david ingram replies;
Farms are tough and depends upon whether it is a working farm and being sold as a working farm or for the personal use of someone. The decision on whether or not to charge GST is the decision of the vendor, not the purchaser. If the vendor decides not to charge and the CRA decides that GST should have been charged, the vendor is liable for the tax because it is assumed that the price included the GST. Therefore, a farmer who was a GST registrant is ALWAYS going to want to charge GST.
There is no general exemption for the sale of farm land
* A Farm Land Transfer to Family Members Exemption (Farming Exemption)
However, there IS a limited exemption on the sale of farm land if:
the property was used by the individual himself and was farmed at any time;
* immediately before transferring the property the property has been farmed; and
* the new use of land must be personal to the individual or to the relative of the individual
*
A similar exemption also extends to the sale by a corporation, partnership or trust with the same criteria as above.
This prevents G.S.T. becoming payable on a deemed change of use of farm land to personal use or the conveyance of farm land to a family member.
We just went through this with a working farm sold to someone who intended to farm it. GST was payable. \
In this case, to defer the GST, you must register as a farm yourself and then, after paying the tax, you will get an input credit and a refund when you file your first return. Recognizing that this can be an immense cash flow problem, the government has come up with form ???? or you can defer the tax by filling in a form ??? . David Stoller, a lawyer in the same building as us at (604) 922-4702
*
can likely give you the name of the form and since he has just finished such a transaction for the seller is likely as good a lawyer as any to help with yours.
His office is at:
801-100 Park Royal South
West Vancouver, BC
V7T 1A2
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