Bo and Trudy Woods

Bo and Trudy Woods November 20, 2008

9600 Ginseng Avenue

Westport, Ontario L1E 9K2

To Bo and Trudy,

Your treed property is called a woodlot and removing trees from woodlots have various tax consequences. A woodlot lot is land that is covered with trees and these trees have been grown without human intervention. This land can be a cottage property or a farmer’s treed land. For tax reasons there are two characteristics for woodlots, commercial and farming.

To fit the criteria of a commercial woodlot there must be a reasonable expectation of profit and there must be a great deal of planning for the woodlot such as a forestry management plan present. In addition to this, there is a continual updating of these plans. Most of the individual’s time is spent attending to the woodlot. Time spent attending to the woodlot should be greater than time spent for employment. Other commercial woodlots are described as adventures in the nature of trade or if a payment was based on the use of production of the property. Adventures in the nature of trade are similar to the above criteria with the addition of some facts; that more than one contract is negotiated, the lengthy nature of the contract, limited suitable acreage for farming, and that the property is not being used for farming.

A farming woodlot is when the individual contemplates the raising and harvesting of the woodlot in a controlled environment. Planting and nurturing the trees in association with a forestry management plan. On a farm, significant attention is paid to manage the growth, health and quality of the trees.

A non-commercial woodlot would be classified as personal use property. Personal use can be determined by examining the size of woodlot, qualification of government assistance, historical record of annual revenue, type of expenditures, education and experience, or if the individual has a membership in any related association. If none of these are true it would be...