Is money from wood sale taxable?

There is no specific set of income tax rules that applies solely to woodlot owners or woodlot operations. The general rules for the computation of income and taxable income apply. The proceeds could be taxed as either ordinary income or as capital gain.

For example, the sale of timber from your property may be classified as capital gains if you operate a non-commercial woodlot, but sales must meet all of the following conditions:

• You could not have acquired the property with the intention of selling the timber.
• Someone other than you must cut and remove the standing timber.
• Your agreement for sale of the trees must be an isolated or infrequent transaction.
• Price for the timber must be a fixed amount, as opposed to being based on board feet or cubic meter.
• Timber can be removed only over a short period of time, usually less than 6 months.
• Purchase price cannot be dependent on the use or production of the land.

You can check in the Canada Revenue Agency (CRA) website which tax rules apply in your case. Steps to Follow to Determine Which Tax Rules Apply 

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