A Landowner's Guide to Selling Standing Timber - the Ontario ...

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A LANDOWNER’S GUIDE TO SELLING STANDING TIMBERSection 6Legal Considerations:Contracts, Taxes,and WorkplaceSafety ObligationsSale of Standing Timber ContractThe following sample contract (page 27 to page 32) canbe used as a guide for selling timber from your woodlot.However, prior to using any sample contract there are twoimportant points you should consider:A “sample” contract is a generic document. It is easy tocopy the contract verbatim thinking it will cover all yourneeds however, in many cases it may not be adequate. Youare advised to use a sample contract only as a general guideand it should be customized to suit your specific needs.Consider using a lawyer to review the contract. Utilizinghis experience is no different than asking the advice of aforestry practitioner to review different forestmanagement options you may be considering to undertakein your woodlot.Revenue Canada and Your Sale ofStanding TimberIs your woodlot part of a farm operation, non-commercialwoodlot or is it a commercial woodlot? A commercialwoodlot has a reasonable expectation of profit, andoperating expenditures can be charged against income. Afarm operation has implications for income reporting, capitalcost allowance, and writing off certain assets.Is your woodlot part of a farm operation or is it acommercial woodlot?Canada Customs and Revenue Agency provides an IncomeTax Interpretation Bulletin, number IT-373R2 Woodlot(Consolidated) February 2001 that defines taxation ofwoodlots. Landowners can obtain a copy by calling CanadaCustoms and Revenue Agency at 1-800-959-2221, or bygoing to the Web site .The best advice at this time is to obtain a copy of thebulletin and speak with your accountant about reportingrevenue and associated woodlot expenses.Workplace Safety and Insurance Board(WSIB) ConsiderationsA landowner could be held liable if an accident occurs onhis or her property during a contracted harvestingoperation. A subcontractor or owner-operator may be aworker or an independent operator for WSIB purposes. Thelandowner should consider the implications of such liability.The best advice for landowners is to call WSIB for aclearance certificate for the operator – a clearancecertificate is a confirmation that an employer is registeredand has met his or her obligations. (The informationprovided in Appendix 11 is from the Workplace Safety andInsurance Board.)A landowner could be held liable if an accident occurs26
A LANDOWNER’S GUIDE TO SELLING STANDING TIMBER- Sample -Sale of Standing Timber ContractSECTION 6This contract entered into this day of 20 , betweenofSellerAddresshereinafter called the Seller, andofAddressPurchaser, hereinafter called the Purchaser.DESCRIPTION OF SALE AREALot(s): Concession(s): Township:Area: acre / hectare County or Regional Municipality:Now therefore this contract witnesseth: (Select which option applies to you then proceed to section II (a).)Option #1 – (Lump Sum Sale)I. The seller agrees to sell and the Purchaser agrees to buy for the TOTAL SUM OFdollars ($) under the conditions set forth in this contract, only those trees specified inthis contract on the above tract of land.Option #2 – (Paid by Scale Sale)I. The Purchaser agrees to pay to the Seller the following amounts for all sawlog quality trees designated for harvest,under the conditions set forth in this contract:/Species: Price: / m 3 / fbmSpecies: Price: / m 3 / fbmSpecies: Price: / m 3 / fbm27
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