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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 BC Farm Status Revoked?

Deadline to Appeal Your BC Property Assessment

BC Farm Income Requirements Waived for 2021 and 2022 Taxation Years

Classifying Land as a Farm in BC

Appeal to BC Property Assessment Review Panel (PARP)

Appeal to BC Property Assessment Appeal Board (PAAB)

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

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

Gross Annual Value

BC Assessment Documentation re Farm Status

Tax Tips

TaxTips.ca Resources

Other Resources For Farmers

Was Your BC 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If your farm status has been revoked in the past year, you may be able to retroactively get it back, depending on the reason you lost it.  If it was revoked because you didn't follow your development plan, or you didn't meet your expected harvest date, but you did meet all requirements of the Farm Regulation, then your farm status was revoked in error.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."

Deadline to Appeal Your BC Property Assessment

If you disagree with the assessed value or the classification of your property on your assessment notice, you have until January 31st (or the next business day if January 31st falls on a weekend) to file an appeal (complaint) to the Property Assessment Review Panel (PARP).

BC Farm Income Requirements Waived for 2021 and 2022 Taxation Years

Due to the pandemic, 2020 income requirements for the 2021 taxation year, and 2021 income requirements for the 2022 taxation year, were waived for existing Farm Class properties.  This means that all Active Farms and Developing Farms that had an official Farm classification from BC Assessment for the 2020 Assessment Roll maintained their Farm Class for 2021 without any action require by the property owners.  See the BC Assessment Special Notification for 2021 Farm Classifications, and the BC Assessment Special Notification for 2022 Farm Classifications.

Classifying Land as a Farm in BC

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 significantly 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 often revised in order to ensure the farm assessment process is fair, equitable and streamlined.

We own this website, and also have a 5 acre Christmas tree farm on Vancouver Island.  At the end of 2013, with about $40,000 (retail value) 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 revoking our farm status.

Appeal to BC Property Assessment Review Panel (PARP)

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.

Appeal to BC Property Assessment Appeal Board (PAAB)

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.

Appeal to BC Supreme Court

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.  However, it set a precedent when it comes to developing farms - there is no deadline for when a developing farm has to achieve the minimum gross annual value requirements, despite what might be in the farm development plan.

The BC Supreme Court decision is Kelt v. British Columbia (Assessor of Area #04 - Central Vancouver Island), 2015 BCSC 1475.  At the time of the court case, our farm had already achieved farm status for the subsequent year, based on gross annual value.  The court case only applied to one year.

Mondaq has the article The Harvest Date that Never Was: Property Tax Assessment of Developing Farms, which was previously on the Bull Housser Tupper website.

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 in BC (Regulation s. 8)

To qualify a property as land under development for a new developing 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 requirements of the Regulation still must be met.
3. It is not necessary to meet the projected harvest date of the development plan (it's a projection, not a deadline), but the 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 (between 1.98 acres to 10 acres), 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 having gross annual value of $2,500 in at least 1 of the 2 years prior to the taxation year (at least one of the reporting periods for the taxation year).

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 January 5, 2024:

Classifying Farm Land - this web page indicates that "gross 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.

Farm Classification in British Columbia Guide Book (2016) - this is the revised guide book that was on the BC Assessment website as of 2016.  It 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".  

The link to the current guide on the BC Assessment website is Farm Classification in British Columbia.

General Application for Farm Classification - scroll down to Farm Forms

The title for unrealized value information in the application for farm classification 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.  The wording under the title is the correct wording.

Tax Tips:

The regulation does not impose a deadline on when a developing farm must meet the required farm revenue.  This has been affirmed by the BC Supreme Court.

If you are doing an appeal to the Property Assessment Review Panel or the Property Assessment Appeal Board, base your arguments on the Classification of Land as a Farm Regulation, NOT on any BC Assessment guides.

TaxTips.ca Resources

BC Property Tax - and Home Owner Grant

BC Speculation and Vacancy Tax

Lifetime Capital Gains Exemption (LCGE) for Qualified Farm Property

Other Resources For Farmers

Using partnerships in your farming business by Robert Fischer of Baker Tilly Canada

Loopholes for Farmers, by Rossworn Henderson LLP (from their Resources page)

Revised: January 05, 2024