PROPERTY ASSESSMENT APPEAL BOARD

Information on Farm Classification Appeals
(February 2017)


This information sheet will help you understand if a property qualifies for farm classification. This is information and not legal advice. Each case is different and the Board must make decisions based on the evidence in each case.

You can link to the legislation and previous Board decisions by clicking on the blue text.

You may want to look at past Board decisions on farm classification using the search decisions page. Contact the Board if you need assistance.

Index of Topics:
You can link directly to the following topics:

What is property classification?

What is farm class?

How is farm class determined?

What if only part of the property is farmed?

How do I apply for farm class?

What are the requirements for farm class?

How do I apply as a developing farm?

What if land is leased for farm purposes?

What happens when I retire from farming?

What if BC Assessment sends a request for information?

What happens if the property does not meet the requirements?

Other helpful information

 

What is property classification?

Most appeals are on the market value of a property; however, some appeals are on the classification of the property. Classification is based on the actual use of the property. All properties in British Columbia are classified into one of nine classifications and some properties are split into two or more classifications. Taxing authorities determine the rate of tax for each class.



 

What is farm class?

Farm class is for land that is used for farming and meets other requirements. Farm class has significant benefits:

  • farm class properties are usually taxed at lower rates;

  • farm land is valued for its value as a farm, which is usually below its market value.

Farm land values are based on schedules (see the Land Values for Farm Land Regulation and Peters v. Area 24). Farm land is also valued without considering its value for other purposes such as residential or commercial, which may be much higher (see the Boardís decision in Cold Water Ranch v. Area 15).

Farm class is only available for land. Property improvements and land, that is not classified as farm, are assessed at their fair market values. Depending on their use, improvements on a farm are usually classified as Class 1 - Residential or sometimes classified as Class 6 - Business & Other.

 

How is farm class determined?

Land classified as a farm must meet the requirements of the Classification of Land as a Farm Regulation (the ďFarm Class RegulationĒ).

Land will only be classified as a farm if is currently used for an agricultural purpose identified in the Farm Class Regulation and it meets the other requirements (see Pugh v. Area 01). The only exception is for a developing farm. Even if your land is in the Agricultural Land Reserve (ďALRĒ) you may not qualify for farm class (see Sintich Enterprises v. Area 26).

 

What if only part of the property is farmed?

If only part of your property qualifies for farm class, then it will be classified into two or more classifications (see section 10 of Prescribed Classes of Property Regulation).

Split classifications must be equitable, which means similar farm properties in the same area should be treated equally in terms of the split between farm and residential classifications (see Denford v. Area 01).

 

How do I apply for farm class?

Land that is farmed does not automatically qualify for farm class. You must submit a General Application for Farm Classification to BC Assessment. This application must be delivered to BC Assessment no later than October 31 before the assessment (for example, by October 31, 2016 for the 2017 assessment roll). This deadline is mandatory and cannot be waived (see Faouaz-Lees v. Area 19).

If farm class is granted, a new application is not required each year. A new owner of a farm may be required to submit a Farm class application by October 31 even though the property was previously classified as a farm (see section 3(2) of the Farm Class Regulation).

 

What are the requirements for farm class?

The main requirements for farm class are:

  • the land must be used for a qualifying agricultural use; and

  • it must generate a minimum revenue from qualifying agricultural products.

Generally, only land that is necessary to the farm and is predominantly used for specified agricultural purposes will qualify for farm class. The requirements of the Farm Class Regulation include:

  1. Use (section 4(1)): All or part of the land must be:

    • used for a qualifying agricultural use (see below table); or

    • the site of a farmerís dwelling (see Robson v. Area 15) and, in some instances, a retired farmerís (or their spouseís) dwelling; or

    • used for the training and boarding horses when operated in conjunction with horse rearing (see Jordens v. Area 23), including some horse stud services; or

    • land that contributes to a qualifying agricultural use such as for drainage, irrigation, buffers and windbreaks (section 4(2.1)).

    BC Assessment may inspect the property to verify that qualifying farming activities are actually being undertaken.

Agricultural Uses



Qualifying Uses

Uses that do not qualify

apiculture

manufactured agricultural derivatives

aquaculture

agricultural products used for domestic consumption on the farm

floriculture/horticulture

breeding and raising pets other than horses

fruit and vegetable production

medicinal marijuana cultivation

livestock raising

crops for human or animal consumption

medicinal plants

seed or turf production

packing house (see details)

  1. Exceptions to the qualifying use requirements (section 4(3)): In the following circumstances, land that is not being used for a qualifying agricultural use may still be classified as farm land:

    (a) If the land is in the ALR and:

    • The land is part of a larger parcel and some of that parcel is being used for a qualifying agricultural use, and

    • This use makes a reasonable contribution to the farm operation and it meets all other requirements of the Farm Class Regulation; and

    • The land is either ancillary to a farmerís dwelling or it is not used or zoned for business, commercial or industrial purposes.

    (b) If land is not in the ALR and it is not being farmed, it may still be classified as farm land. The land must be part of a larger parcel and at least some of the parcel must be used for a qualifying agricultural use (see section 4(3.1)).

    A farm operation may consist of several separate land parcels, as long as it is operated as an integrated unit. If the separate land parcels are in different assessment areas, all parcels must be necessary to the farm and predominantly used for a qualifying agricultural use.

  1. Annual value of primary agricultural products:

    A farm must meet a minimum income threshold (called gross annual value). For further details, see section 5 and Pappas v. Area 23.

    The annual income requirement varies with the total area of the farm operation:

    • $2,500: if the area is 0.8 to 4 hectares (a hectare is 10,000 square meters or about 2.47 acres);

    • $2,500 plus 5% of the actual value of the farm operation: if the total area of is greater than 4 hectares;

    • $10,000: if the total area is less than 0.8 hectares.

    These income thresholds are based on farm gate amounts which are usually, but not always, the gross selling price. Farmers should be prepared to provide valid sales receipts to BC Assessment, as clear evidence may be required (see Marwaha v. Area 14). There are some exceptions to these income requirements (see section 6 and section 6.1).

    There are special rules for land that was classified as a farm in 1995 Ė see section 5(5).

    The total area of a farm operation is the area that is being used for a qualifying agricultural use. Parts of the land that contribute to a qualifying use are included in the total area (see Coates v. Area 04).

  1. Developing farms:

    If a farmer is developing a farm, the farmer may not have to reach the threshold value of production for a period of time (see section 8).

 

How do I apply as a developing farm?

Land that is not currently farmed, but is being prepared for farming, may receive farm class as a developing farm. An application for a developing farm must be filed by October 31 using BC Assessmentís General Application for Farm Classification. Part 8 of this form is very important for a developing farm application.

The farm development plan must show that sufficient area is being planted so that, when harvesting occurs, the other requirements of the Farm Class Regulation will be met. The requirements are different depending on what agricultural product is being planted. Sufficient area must be prepared and planted by October 31 before the assessment (e.g. by October 31, 2016 for the 2017 assessment).

Section 8(8) allows a farmer to delay planting until June 21 of the assessment year, provided that the farm area was prepared for planting by October 31 of the previous year.

You must demonstrate that the farm development plan is viable and that preparations are being undertaken in accordance with a previously submitted plan (see Parker v. Area 17 and Cam-North Development Corp. v. Area 14). You must also show that the plan will meet the applicable minimum gross annual value requirements (see Kelt v. Area 04 and Gill v. Area 15).

If you do not follow your development plan, BC Assessment can remove farm class (see Baker v. Area 10).

 

What if land is leased for farm purposes?

The farmer does not always have to be the owner of the property. Farm class can also be granted if the owner leases the land to another person who actively farms the land.

A copy of the lease must be submitted to BC Assessment by October 31 of the previous year (Hindson v. Area 17). The farm lease must include certain details, including the partiesí names and signatures, the lease area, the legal or other clear description of the property, and the lease start date (see section 7(2)).

A lease form is included in BC Assessmentís General Application for Farm Classification (see Part 13 of the form). You may use your own lease form as long as you include all the required information.

The leased land must:

  • make a reasonable contribution to the overall farm operation (see Barnay v. Area 17), and

  • be 0.8 hectares or greater (unless the land is in the ALR and used for a qualifying agricultural purpose).

To avoid losing farm class, property owners should submit a new lease to BC Assessment, before or immediately after, the current lease expires.

 

What happens when I retire from farming?

Under section 23(3.1) of the Assessment Act and section 12 of the Farm Class Regulation, land used for a retired farmerís dwelling may be classified as farm land. The requirements include that for at least 20 years:

  • The house was the principal residence and owned by retired farmer or the farmerís spouse; and

  • The property was classified as a farm.

You must be at least 65 years of age and the dwelling must be on land within the ALR.

A Retired Farmerís Dwelling Land Application must be sent to BC Assessment by October 31 each year.

 

What if BC Assessment sends a request for information?

BC Assessment may request information from an applicant. BC Assessment may require an owner or lessee to provide information, such as farm product sales receipts or details of any farm lease (see section 10).

The owner or lessee must provide the requested information by the required deadline; otherwise, the land may be declassified (see Shoaf v. Area 27).

 

What happens if the property does not meet the requirements?

Owners who are farming may find it difficult to accept that they could lose farm class simply by not meeting one of the requirements in the Farm Class Regulation.

You may lose farm class for a number of reasons, such as:

  • if you fail to submit a farm application as requested by BC Assessment,

  • the farm does not achieve the gross annual value threshold,

  • if you do not provide information requested by BC Assessment,

  • if you do not follow your farm development plan, or

  • if you do not submit a valid lease to BC Assessment.

If you lose farm class, you can apply for farm class to be reinstated in a subsequent year.