Taxation of Agricultural Land “Suitable for Cultivation but Not Farmed”: New Fiscal Levers for Municipalities

Since its adoption on March 20, 2025, Bill 86 has introduced several amendments concerning agricultural land in Québec. Among the most significant changes, municipalities have been granted new taxation powers, allowing them to impose a surtax on land designated for agricultural use and classified “suitable for cultivation but not farmed”—criteria that may give rise to numerous legal debates.

Taxation of “Agricultural Properties”

The Act respecting municipal taxation (the “AMT”) allows a municipality to establish a distinct property tax rate for the category of agricultural properties, namely assessment units consisting exclusively of immovables included in a registered agricultural holding with the Ministère de l’Agriculture, des Pêcheries et de l’Alimentation (the “MAPAQ”)¹.

To support agricultural operations, municipalities may set a tax rate lower than the general property tax rate for agricultural properties² and must also comply with the maximum taxable value for such properties periodically established by MAPAQ³.

However, agricultural land that is not part of an agricultural holding registered with MAPAQ—particularly land held for speculative purposes—cannot benefit from these tax reductions and is taxed at the base rate set by the municipality⁴. An exception applies where such land meets the criteria to be classified as “serviced vacant land,” for which municipalities are authorized to apply a significantly higher tax rate—up to four times the base rate—with the goal of encouraging land development.

Taxation of Land “Suitable for Cultivation but Not Farmed”: What Has Changed?

Bill 86 introduced amendments to the AMT allowing municipalities to identify, in their assessment rolls, “agricultural land suitable for cultivation but not farmed.” This designation requires the simultaneous fulfillment of the following three conditions:

1. land suitable for soil and crop cultivation or for animal grazing;
2. land that is not currently used for such purposes;
3. land located within the permanent agricultural zone established under the Act respecting the preservation of agricultural land and agricultural activities.

These criteria alone are likely to give rise to debates regarding whether a given parcel of land can feasibility be cultivated, based on its characteristics and the biophysical conditions of the soil and surrounding environment.

Nevertheless, land meeting these criteria, -and not falling under any of the exceptions listed below, may now be identified as such on the assessment roll and be subject to a surtax—similar to that applied to “serviced vacant land”—of up to three times the base rate⁵. Assessors may amend the assessment roll during a fiscal year to reflect when land becomes, or ceases to be, “suitable for cultivation but not farmed.”⁶ Property owners and prospective purchasers should remain vigilant and take into account this possibility before completing a transaction.

Conversely, agricultural land classified as “suitable for cultivation but not farmed” may be exempt from the surtax if it falls within one of the following situations:

• it forms part of a registered agricultural operation and therefore qualifies as an “agricultural property”;
• it is forest land covered by a forest producer certificate;
• it is located in a wetland or water-rich environment;
• it is subject to a rule prohibiting any agricultural use;
• it is subject to a vested right or a right of use for a non-agricultural purpose;
• it is occupied by a building with a value exceeding $10,000;
• it has an area not exceeding one-half hectare.

What Are the Impacts of These Amendments to the Act Respecting Municipal Taxation?

For municipalities, the amendments to the AMT are intended to grant expanded taxation powers, enabling them to influence land development and the protection of agricultural land. In our view, this measure is particularly aimed at discouraging the acquisition of suitable agricultural land for which no agricultural activity is planned by the owner, notably for speculative or future development purposes. Only time will tell whether municipalities will choose to broaden their revenue sources by exercising this new power.

For landowners, the impact of these amendments is more limited, since many non-farmed agricultural lands still form part of an agricultural holding registered with MAPAQ. Nevertheless, the changes may create challenges for start-up agricultural businesses, which are not granted a grace period under the AMT, as well as for owners using their agricultural land for recreational purposes, whose use would not qualify for MAPAQ registration. Similarly, owners of non-farmed agricultural land held for speculative purposes may see their property tax bills increase, even if their property cannot be classified as “serviced vacant land.”

Accordingly, the recent amendments to the AMT regarding the criteria for applying or exempting the tax on “land suitable for cultivation but not farmed” may be open to interpretation—particularly those concerning the presence of wetlands and water-rich environments, soil quality, and the feasibility of agricultural use. It is anticipated that these issues will give rise to debates between municipalities, assessors, and landowners, for which legal advice may be necessary.

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^{1. MTA, s. 244.36.1.}

^{2. MTA, s. 244.49.0.1.}

^{3. Regulation respecting the maximum assessable value of land for any agricultural operation referred to in section 231.3.1 of the Municipal Taxation Act.}

^{4. MTA, s. 244.38.}

^{5. MTA, s. 244.77.}

^{6. MTA, s. 174(13.3).}

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