Transfers from the Personal Representative of the Estate to an Individual

Table of contents

Introduction

Conditions which must be meet to qualify for the exemption

Important points to consider

How to claim the Land Transfer Tax exemption

How to claim a tax refund


Introduction

An exemption from land transfer tax may apply on certain transfers of farmed land from the personal representative of the estate of a deceased individual to an individual or individuals who are family members of the deceased.

The personal representative of the estate is the transferor. The individual(s) receiving the land is/are the transferee(s).

The terms family farm corporation, farming, farming assets, members of the family, child, and spouse are defined in the Act or in Regulation 697.

When claiming the family farm exemption, please note that there is a distinction between a family farm corporation and an individual. An individual refers to a single human being operating a farming business in a personal capacity. A family farm corporation is not an individual. It is a separate legal entity from its shareholders and owners. Although a corporation is not an individual, it is a person. Please refer to the court case of Upper Valley Dodge Chrysler Limited v. (Ontario) Minister of Finance for more details on the subject.

It is also important to understand that if a corporation is farming the land (e.g., the expenses and income of the farming are on the corporation's books) then the individual who performs the physical and intellectual work is doing so on behalf of the corporation (for example, as an employee), and not as an individual in his or her personal capacity.

Conditions which MUST be met to qualify for the exemption

The land transfer would have qualified for the individual‑to‑individual farmed land exemption had it been made by the deceased individual immediately before his or her death. This means:

Before the death of the deceased:

  • the land was used predominantly in farming, and
  • the farming was carried on exclusively by the deceased or an individual or individuals, each of whom is related to the deceased.

At the time of the transfer of land:

  • each of the transferees and the deceased must be related individuals, and
  • the principal purpose of the transfer is to enable individuals, each of whom was related to the deceased, to continue the farming on the land.

Important points to consider

Historically, applications for this exemption most often fail for one of the following reasons:

FAIL: The activity conducted on the land does not meet the definition of farming.

The definition of farming includes:

  • tillage of the soil
  • breeding, raising or grazing of livestock of all kinds
  • raising poultry and production of poultry products
  • fur farming
  • dairy farming
  • fruit growing
  • growing food for human consumption or for feeding livestock
  • bee keeping.

The definition of farming does not include:

  • growing Christmas trees
  • nurseries (growing flowers, bushes, etc.)
  • retail stores
  • sod farms
  • horse stables
  • contracting services to improve another farmer's land (e.g., excavation work, barn or fence building)
  • manufacturing products from crops grown
  • leasing land to a person who farms the land whereby the lessor is not entitled to share in the crops, livestock or other commodities raised or produced on the land or their proceeds of sale.

FAIL: Before the death of the deceased, a corporation was farming the land.

Before the death of the deceased, an individual as described in this section must have farmed the land in his or her personal capacity. If the individual farming the land was farming the land under the direction of a corporation (e.g., the expenses and income of the farming are on the corporation’s books before the transfer), then the individual who did the physical and intellectual work did so for the corporation (for example, as an employee), and not in the individual’s personal capacity.

FAIL: After the transfer a corporation farms the land.

After the transfer, an individual is required to farm the land in his or her personal capacity. If an individual farms the land under the direction of a corporation (e.g., the expenses and income of the farming are on a corporation’s books after the transfer), then the individual who does the physical and intellectual work is doing so for the corporation (for example, as an employee), and not in the individual’s personal capacity.

How to claim the Land Transfer Tax exemption

Electronic registration

If the transfer of land will be registered on title through Ontario’s electronic land registration system, the exemption may be claimed by selecting electronic statements 9123 and 9079 located on the exemption tab. Note that selecting statement 9123 will require information to be entered in the applicable text boxes. If these statements as they read in bold are not true, they must not be selected, and the exemption may not be claimed.

Statement 9123

I/We have read and considered Regulation 697, R.R.O 1990, including the definitions of 'family farm corporation', 'farming', 'farming assets' and 'members of the family' as defined by the Regulation.

Each transferor or (if applicable) each shareholder of the transferor corporation, and each transferee or (if applicable) each shareholder of the transferee corporation are members of the same family, and where the transferor(s) is/are the personal representative(s) of the estate of a deceased individual, the deceased individual was also one of the members of the family immediately prior to his/her death.

Prior to the conveyance, the lands were used predominantly in farming carried on by [NAME(S)] during the period(s) [TEXT].

Statement 9079

The conveyance is from the personal representative(s) of the estate of a deceased individual to one or more individuals for the principal purpose of enabling that individual or individuals (each of whom was a member of the family of the deceased individual immediately prior to the deceased individual's death) to continue farming on the land, and the conveyance qualifies for the exemption under subsection 2.1(1.1) of Regulation 697, R.R.O. 1990 or clause 3(1)(c) of Ontario Regulation 70/91.

Paper registration

If the transfer of land will be registered on paper at the Land Registry Office, two types of affidavits must be attached to the transfer in addition to the transfer to be registered:

Once the Land Registrar is satisfied with the tendered documents, the transfer may be registered without the payment of land transfer tax.

No registration on title

Where notice of the transfer of land is not registered, the exemption is still available. In these cases, the following documents must be submitted to the Land Taxes Section of the Ministry of Finance within 30 days of the date of the disposition:

  1. a completed Return on the Acquisition of a Beneficial Interest in Land form
  2. a copy of the agreement of purchase and sale and other agreements related to the transfer
  3. an Affidavit, Regarding the Exemption for the Conveyance or Disposition of Farmed Land, properly completed by the transferees, and
  4. any other documentation that the ministry may request.

The above noted documents should be sent to:

Ministry of Finance
Compliance Branch
Land Taxes Section
33 King St. West
P.O. Box 625
Oshawa ON L1H 8H9

FAX: 905 433-5770

If a return is not filed within 30 days, a request for an extension to file the return containing an explanation for the delay is required.

Failure to file a return may result in an assessment of land transfer tax, penalty and interest.

How to claim a tax refund

If land transfer tax has been paid on a transfer of farmed land, and the transfer meets the criteria for the land transfer tax exemption, a request for an exemption and a refund of overpayment of land transfer tax may be made within four years from the date the tax was paid.

To apply for a refund, the following documentation must be sent to the Land Taxes Section:

  1. a copy of the registered instrument upon which land transfer tax was paid (in the case of electronic registration, include a copy of the docket summary which relates to the transaction)
  2. a copy of the agreement of purchase and sale and other agreements related to the transfer
  3. an Affidavit, Regarding the Exemption for the Conveyance or Disposition of Farmed Land form, properly completed by the transferees, and
  4. any other documentation that the ministry may request.

Requests for a land transfer tax refund may be sent to:

Ministry of Finance
Compliance Branch
Land Taxes Section
33 King St. West
P.O. Box 625
Oshawa ON L1H 8H9

FAX: 905 433-5770

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