In a recent Legal Alert article, I wrote about the exemption from property transfer tax when a family farm is transferred. One of the potential problems with claiming this exemption is that it is more difficult to claim the family farm exemption upon a person’s death than it is if that person transferred the property during his/her lifetime. An expansion of this exemption was announced as part of the 2013 British Columbia budget.
Under the existing legislation, a transfer of a family farm made as a result of a person’s death (e.g. through his/her will) will only be exempt if the deceased was farming the land immediately before death. This requirement has been interpreted by the Property Transfer Tax office to mean that if there is any period of time immediately before the deceased’s death that he/she was not able to farm the land, the exemption will be lost. This is a stricter test than the one applied to a transfer of a family farm during a person’s lifetime, in which the exemption may be claimed if any of the transferor’s family members are farming the land.
Once the new legislation is formally passed, the Property Transfer Tax Act will specifically state that a transfer of a family farm made as a result of a person’s death may qualify for the exemption if the land was farmed by the deceased, the deceased’s family members or a family farm corporation. This is good news as it will make it significantly easier for the family farm exemption to be claimed.
The revised Property Transfer Tax Bulletin (still subject to Royal Assent) is available at: http://www.sbr.gov.bc.ca/documents_library/bulletins/PTT_008.pdf
For more information on related matters, contact Melodie Lind who is part of our Tax Law Group at: [email protected] or (250) 869-1210
