Viability of private campsites threatened

Application of a higher tax rate against businesses, like private campsites, is causing some owners to look at other options ...

Private campgrounds are at risk of closing due to higher taxes

Todd’s RV and Camping has been a Peachland staple for 60 years.

The family business offers dozens of sites with access to the lake. There’s a playground, store, hot showers and a volleyball pit —when it’s in full-swing, it feels like a throwback to quieter times in the Okanagan.

And it may be at risk of closure.

Graham Todd runs the site and he says that a recent increase to his income tax bill could do the business in.

“The amount of taxes we already pay and then water, sewer and outrageous Hydro bills it is a challenge to keep a private campground running,” said Todd. “Not to mention one of our main competitors are provincial campgrounds, which are under priced.”

Campsite owners like Todd are facing a tax rate hike to 50 per cent, from the 15 per cent they were accustomed to, explained Shane Devenish, executive director of the Canadian Camping and RV Council.

The change is because Canada Revenue Agency started acting differently to corporations labelled “specified investment businesses” in 2016.

A specified investment business is described in the Income Tax Act as a business with the principal purpose of deriving income from property, including interest, dividends, rents, or royalties and has a Corporate Tax rate of around 50 per cent.

However, income from a specified investment business is only eligible for the Small Business Deduction if the corporation employs five or more full-time employees all year.

With 75 per cent of privately run campsites, Todd’s included, there’s no need to employ that many people when summer wanes.

Devenish said previously the CRA knew this but didn’t bother to tax private campsites at the higher rate.

“Now they’ve hit three private campsite owners in Ontario, one in Quebec (with the higher tax rate),” he said. “They’re taking two of those to court.”

The Canadian Camping and RV council is backing those campsite owners in their legal battles because if the CRA sets precedence and continues doling out tax bills at the higher rate campsites across the country will likely fold.

“You have some campground owners who need second jobs to get by,” said Devenish.

“They don’t make a whole lot and when they’re charged tens of thousands extra in tax they can’t afford it.”

Of the three campsites facing legal action, Devenish said two will close if they lose.

Other campsite owners have indicated they will follow suit.

“That’s why it’s an industry-wide problem,” he said.

“If we see campgrounds close, fewer consumers will camp and RV manufacturers will get less business.”

Trying to add further perspective, Devenish said, there are six million Canadians who camp.

They, he said, shouldn’t have their options limited.

“Especially in our 150th year when tourism is trying to promote a ‘come into Canada’ message,” he said.

“Then on the other side we have the CRA impacting the number of us who will be around for the year.”

One hope for campsite owners, however, is coming from the standing committee on finance.

Devenish’s organization made a presentation to them in the budget consultations and when they submitted their report Dec. 7, concerns of campsite owners were included as something to fix.

Central Okanagan-Nicola-Similkameen MP Dan Albas was part of the standing committee and listened to industry concerns.

He’s since toured local campgrounds and listened to area campsite owners, like the Todd’s, and taken their concerns to Ottawa.

“Obviously, there are offices both in Kelowna and in my former riding of Okanagan–Coquihalla, in Penticton, and having toured them and met some of the people who are involved, I know they are certainly working very hard,” Albas said in the House of Commons last month.

“That being said, I’d like to discuss the CRA a little. Obviously, it’s somewhat at arm’s length from government, for good reasons. Because of that, there is an opportunity for us to talk about things that have been a reason for concern.

“An example is the issue of campgrounds, particularly whether a campground is now no longer eligible for the preferential small business rate.”

Albas said he believed the problem was arising from the fact these businesses are seasonal.

“In British Columbia—I’m not sure if you are aware, Minister—real estate prices have increased dramatically over the past 20 years,” he said in the house.

“Tourism is very important to the Okanagan, and many of these smaller campgrounds may decide that, if they cannot run as a small business and access that—instead of being classified as large operations, million-dollar corporations—they may simply sell. This is a concern in my area.”

Albas said while discussions are ongoing there is hope for changes to save the industry.

 

 

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