Mr. Speaker, the determination of how income from the sale of trees on a woodlot would be taxed under the Income Tax Act is a question that would require a review of the facts and circumstances of the particular situation.
“Woodlot” is used in a broad sense to mean land covered with trees. A woodlot includes treed land held primarily as a source of fuel, posts, logs or trees, whether the trees are grown with or without human intervention. The term also includes treed land that is part of a cottage property and a farmer’s wooded land.
Generally, where a woodlot is a non-commercial woodlot and money or other valuable consideration is received for the sale of timber or the right to cut timber, the sale proceeds are subject to tax on capital account, as a capital gain, generally as a disposition of personal-use property. Generally, a loss on the sale of personal-use property is not deductible.
A capital gain is generally calculated as the proceeds of disposition on the sale of property minus the adjusted cost of the property and related selling expenses. Depending on the situation, capital gains could result from the sale of salvageable lumber.
For more information on capital gains, members may refer to “T4037 Capital Gains 2016” on www.Canada.ca.
The CRA recognizes the difficulties faced by Canadians affected by wildfires in British Columbia and understands that natural disasters may cause hardship for taxpayers whose primary concerns during this time are their families, homes, and communities.
The Canada Revenue Agency, or CRA, administers legislation that gives the Minister of National Revenue discretion to grant relief from penalty or interest when the following types of situations prevent a taxpayer from meeting their tax obligations: extraordinary circumstances, actions of the CRA, inability to pay or financial hardship, or other circumstances. For more information about the circumstances that may warrant relief from penalties or interest, members may refer to “Cancel or waive penalties or interest” on www.Canada.ca.