Income Tax Act — I-3.3 28
Farming or fishing business 28 (1) For the purpose of computing the income of a taxpayer for a taxation year from a farming or fishing business, the income from the business for that year may, if the taxpayer so elects, be computed in accordance with a method (in this section referred to as the “cash method”) whereby the income therefrom for that year shall be deemed to be an amount equal to the total of (a) all amounts that (i) were received in the year, or are deemed by this Act to have been received in the year, in the course of carrying on the business, and (ii) were in payment of or on account of an amount that would, if the income from the business were not computed in accordance with the cash method, be included in computing income from the business for that or any other year, (b) with respect to a farming business, such amount, if any, as is specified by the taxpayer in respect of the business in the taxpayer’s return of income under this Part for the year, not exceeding the amount, if any, by which (i) the fair market value at the end of the year of inventory owned by the taxpayer in connection with the business at that time exceeds (ii) the amount determined under paragraph 28(1)(c) for the year, (c) with respect to a farming business, the amount, if any, that is the lesser of (i) the taxpayer’s loss from the business for the year computed without reference to this paragraph and to paragraph 28(1)(b), and (ii) the value of inventory purchased by the taxpayer that was owned by the taxpayer in connection with the business at the end of the year, and (d) the total of all amounts each of which is an amount included in computing the taxpayer’s income for the year from the business because of subsection 13(1), 80(13) or 80.3(3) or (5), minus the total of (e) all amounts, other than amounts described in section 30, that (i) were paid in the year, or are deemed by this Act to have been paid in the year, in the course of carrying on the business, (ii) in the case of amounts paid, or deemed by this Act to have been paid, for inventory, were in payment of or on account of an amount that would be deductible in computing the income from the business for the year or any other taxation year if that income were not computed in accordance with the cash method, and (iii) in any other case, were in payment of or on account of an amount that would be deductible in computing the income from the business for a preceding taxation year, the year or the following taxation year if that income were not computed in accordance with the cash method, (e.1) all amounts, other than amounts described in section 30, that (i) would be deductible in computing the income from the business for the year if that income were not computed in accordance with the cash method, (ii) are not deductible in computing the income from the business for any other taxation year, and (iii) were paid in a preceding taxation year in the course of carrying on the business, (f) the total of all amounts each of which is the amount, if any, included under paragraph 28(1)(b) or 28(1)(c) in computing the taxpayer’s income from the business for the immediately preceding taxation year, and (g) the total of all amounts each of which is an amount deducted for the year under paragraph 20(1)(a) or (uu), subsection 20(16), section 30 or subsection 80.3(2) or (4) in respect of the business, except that paragraphs 28(1)(b) and 28(1)(c) do not apply in computing the income of the taxpayer for the taxation year in which the taxpayer dies. Acquisition of inventory (1.1) Where at any time, and in circumstances where paragraph 69(1)(a) or 69(1)(c) applies, a taxpayer acquires inventory that is owned by the taxpayer in connection with a farming business the income from which is computed in accordance with the cash method, for the purposes of this section an amount equal to the cost to the taxpayer of the inventory shall be deemed (a) to have been paid by the taxpayer at that time and in the cou