In an October 3, 2005 External Technical Interpretation, CRA note that farmland is qualified farm property where it was used by the individual, or a parent or child of the individual, principally in the course of farming in Canada in at least five years during which the property was owned by the individual, or a parent or child of the individual (rules for pre-June 18, 1987 property). Because the property was farmed by the parent, it will be qualified farm property eligible for the enhanced capital gain exemption, even though it included a gravel pit operation.

In another October 3, 2005 External Technical Interpretation, CRA note that to be qualified farm property on post- June 18, 1987 property, the individual meeting the two-year gross revenue test may also be the spouse, child or parent. If a parent has met the two-year gross revenue test while he/she owned the property, and the parent later transfers the property to a child, the child is regarded as having met the two-year gross revenue test requirement even though the child may have never farmed the property.

Also, a reference to “parent” or a “child” includes a reference to a grandparent or a grandchild.