Southwestern Ontario campground owners know the tax axe could fall at any time, according to a report by the St. Thomas Times-Journal.
As they prepare to file their returns this spring, they know they might be one Canada Revenue Agency (CRA) audit away from a reclassification that could cost them thousands.
“It’s a huge worry. It’s very unfair, and it’s all across Canada,” said Joe Bardoel, owner of Golden Pond RV Resort west of Ingersoll.
The CRA is re-examining campsites’ eligibility for tax breaks, specifically the small business deduction. Some sites, once seen as service-based companies, are being reclassified as rental properties — an on-paper move that comes with a hefty tax burden.
“The small business tax deduction gives you a combined provincial and federal tax rate of 15%,” said Shane Devenish, executive director of the Canadian Camping and RV Council (CCRVC). “The classification that they’re grouping some campgrounds into, it’s an investment tax rate — the same as an apartment building or a mobile home park. That combined tax rate is anywhere between 49% and 52%.”
Devenish said four Ontario campgrounds have lost their small business designation to date, a number he expects to rise as agency audits continue. It’s a touchy subject in the industry. Some campsites that have lost their small business designation are afraid to speak up.
“They don’t want their business impacted. They don’t want their campers to know, because they might fear they’ll go out of business,” he said, adding the uncertainty might shake consumer confidence and jeopardize summer bookings.
Campsites need to show they’re service-based enterprises to qualify for the small business rate. The CRA looks kindly on campgrounds that make money from extras — such as laundry rooms, activities or tuck shops — because the income is important to its bottom line. Adding amenities can keep campgrounds from being classed as specified investment businesses by the CRA.
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