Federal government removes small business status from private campgrounds

Algoma-Manitoulin-Kapuskasing MP Carol Hughes

   Decision could endanger businesses’  ability to survive, says MP Hughes

TORONTO – The federal government has removed the small business status from private campgrounds, a move that could endanger their ability to survive, says Algoma-Manitoulin-Kapuskasing MP Carol Hughes.

“This is an issue I had worked on quite a bit previously, about this being looked at by the government, writing letters and bringing concerns forward on behalf of businesses in this constituency. For us, camping and campgrounds provide a huge economic activity in our riding, not only for locals but the many people who visit our area for these services,” said Ms. Hughes. 

“At this time, I am continuing to do research on the decision that has been made. This is an issue we have worked on for a few years, raising concerns with the ministry of tourism, finance, small business and Revenue Canada. It seems that there is not a great deal of understanding of how these businesses operate, and that removing the small business status would endanger these businesses ability to survive,” said Ms. Hughes.
One private campground owner, who wished to remain anonymous, told the Recorder that removing the small business status, “will be devastating to us. I’m not sure if we will be able to continue (to operate).”

A release from the Ontario Private Campground Association dated September 3, 2019 reads, “while Canadians enjoyed the last long weekend of the summer, Ontario’s incorporated campgrounds are deemed invaluable in the province’s economy and Canada. In a judge’s decision on Friday, incorporated campgrounds are too small to qualify as small businesses. Under direction from the Ministry of Finance Canada and the Ministry of National Revenue, the CRA has targeted small Ontario businesses and won a manipulated tax law ruling.”

“Since the 2015 federal election, Prime Minister Trudeau’s government has taken aim at the camping industry not only in Ontario, but Quebec and Alberta as well. This is impacting tourism and rural economic prosperity across the country. With the judge’s decision, it is a nail in the coffin for family-owned businesses,” the release notes.

“The ruling will inevitably stretch to negatively impact other seasonal small businesses such as ski hills, golf courses, marinas and tree-top trekking. Because of the description from the judge, park model trailers are now deemed ‘mobile homes,’ which is a misguided and naïve description of campgrounds in Ontario,” the release continues. “These campgrounds have meticulously followed federal, provincial and municipal laws and by-laws to be a profitable business. This decision could not be more misguided in its understanding of the difference between a mobile home park and a campground.”

The release continued, “In 2016, the CRA changes its application of a tax law and determined that based on business structure, some private-sector campgrounds were too small to qualify for the small business tax deduction. Largely because most campgrounds do not employ five plus full-time year-round staff, ignoring the fact that most do not have five year-round employees, as the majority of campgrounds in Ontario close during the winter months to comply with municipal zoning.”

“The decision by the judge has now effectively prohibited these family-run campground owners from retiring, as they now have lost out on capital gains options. They now must pay hundreds of thousands of dollars in back taxes for being, as the CRA claims, ‘inactive’ and ‘essentially a mobile home park,’ which is an entirely false claim,” continued the OPCA.

The OPCA pointed out campgrounds require a tremendous amount of work to turn a profit. Maintaining land, park amenities, camper management, buying and selling RVs, septic and waste management, water management, flooding mitigation, and marketing and advertising for their business. “It is illogical for the CRA, federal governments and the courts to claim campgrounds are an ‘inactive’ business.”

“These businesses must maintain the campgrounds, roads, showers, bathrooms and much more to operate,” said Ms. Hughes. “And they hire summer students to work-with this decision there is going to be more outmigration. And these businesses pay municipal taxes as well.” 

She explained, “in 2015, the Stephen Harper government that they would review the rules on this, and in 2016 the Justin Trudeau government said the review had been completed and said there would be no changes. Now changes are being made and the government is going after back tax takes. This could devastate these businesses.”

“I’m going to continue to work closely with campground owners and get more information on how we should best approach this issue now,” said Ms. Hughes. 

“I am extremely disappointed,” said Alexandra Anderson, executive director of Camping in Ontario. “The decision did not provide the industry with the clarity that we were seeking. We are now exploring appeal strategies.”

“This is our association’s 50th anniversary and we are heartbroken with the decision handed down today by the courts,” said Mike Tomaszewski, president of the Board of Camping in Ontario. “We are family businesses that provide sustainable jobs for rural communities. We deliver on environmental and economic prosperity and life for Ontario towns. We’re not tax evaders, we contribute to our economy.”