Beekeeping and Property Taxes – How many hives are enough?

AS PREVIOUSLY PUBLISHED IN THE RURAL VOICE:

Beekeeping, not bookkeeping.  The Assessment Review Board (“ARB”) recently issued a decision in which the number of beehives kept by a property owner was the deciding factor in denying him farm classification for his property.  The ARB agreed with the position taken by the Municipal Property Assessment Corporation (“MPAC”), the not-for-profit corporation mandated to classify and assess the value of land in Ontario for property tax purposes, that a property must have no fewer than 50 beehives to be assessed as “farm land” where beekeeping is relied upon as the relevant farming activity.

Land in Ontario can be used for farming purposes without being classified as farm land for property tax purposes.  The default classification for property is residential.  In the beekeeping case before the ARB, the property at issue consisted of 73 acres of land.  The owner contended that 1 acre, on which his residence was situated, should be left in the residential property class.  The remaining 72 acres, he argued, should be placed in the farm property class because he carried on a commercial beekeeping operation on the property.  In 2019, the tax year under appeal, the owner had kept 20 beehives.

The requirements for classification in the farm property class are set out in the General Regulation made under the Assessment Act (the “Act”), the legislation that governs property taxation in Ontario.  The Act does not define “farm land”, but one of the prescribed requirements is that Section 19(5) of the Act applies to the land.  Section 19(5) provides special rules for valuing “farm lands used only for farm purposes”.  The ARB has previously identified several factors to be considered in determining whether a property is “farm land” including: whether the land has physical characteristics of a farm; whether there is a farming operation being carried out by a bona fide farmer; the surrounding uses of the land; and the history of uses of the land. 

This was not the first time the ARB had been asked to find that beekeeping supported a classification of property as farm land.  In fact, as recently as 2020, the ARB had denied an appeal where the owner argued that the presence of two beehives made a one-hectare area on the property at issue “farm land”.  In that case, an expert witness testifying for MPAC explained that:

… land has to have “50 or more hives” before MPAC will assess it as a commercial bee keeping operation.  Keeping less than 50 hives is not considered a bona fide farming operation and is considered to be recreational or hobby farming.  He advised that the 50 bee hive limit is not arbitrary as it is consistent with the bee keeping industry, which includes the Ontario Beekeepers’ Association, the Canadian Association of Professional Apiculturists, the Canadian Honey Council and Ontario’s Ministry of Agriculture, Food and Rural Affairs and Agricorp.

The ARB acknowledged that keeping two beehives may well be a farming activity or purpose, but concluded that it only rises to the level of a “recreational or hobby farm”. 

In the more recent case, the appellant owner argued that both the ARB, in its 2020 decision, and MPAC, in its policy, focused on the wrong factor.  The relevant factor should not be the number of beehives kept, the owner argued, but gross farming income.  He submitted that the provincial laws governing the classification of farm land and regulation of farm businesses “state they are determined by meeting gross farming income requirements.”  In order to qualify as a farming business within the meaning of the Farm Registration and Farm Organizations Funding Act, a farm operation must have gross farming income of at least $7,000.  As the appellant owner’s beekeeping operation had grossed $7,500 in 2019, he argued that his operation was a bona fide farm operation that made his property “farm land”.

The ARB rejected this argument.  While gross farming income may be an essential factor in eligibility for registration of a farm business in Ontario, farm income alone is not the relevant measure of a farming operation for property tax classification purposes.  The ARB came back to the 50-beehive threshold, which it agreed was a rational and not an arbitrary dividing line for the purposes of property classification between a bona fide farming operation and farming activity only to the level of recreation or hobby farming.  The ARB referred to a 2017 decision of the Federal Court citing evidence that at least 50 beehives (colonies) are required to augment a person’s income significantly, elevating an operation beyond a hobby to a commercial enterprise. 

All was not lost for the appellant owner, though.  While he had only 20 beehives in the period relevant for the 2019 tax year, he had increased his hive count to at least 50 in the time period relevant for the 2020 tax year.  As such, MPAC agreed that a portion of the property was “farm land” in 2020, resulting in a reduction in the assessed value of the property by $46,000.  

Read the ARB decision at:  2021 CanLII 26724