CRA says private campgrounds not eligible for small business tax rate

Tax forms from the Canada Revenue Agency.

A family-run campground in southwestern Ontario is facing a tax bill for close to $250,000 because the Canada Revenue Agency says it’s not eligible for the small business tax rate.

The CRA said the campground’s principle purpose is to derive rental income instead of providing a service, so it should be paying three times what small businesses pay.

“We were pretty shocked and sickened, you know, they’re claiming that we owe back taxes for the last three years, plus interest, at a way higher tax bracket than we’re in,” the campground owner, who did not want to be identified, told CTV News.

Industry officials argue that campgrounds provide a service similar to that of hotels and motels, both of which are usually eligible for the small business tax rate.

“They sell firewood, most of them have stores, a lot of them have restaurants, some of them have laundromats, places where you can clean your ATV. These are all services,” said Alexandra Anderson, the executive director of Camping in Ontario.

In 2015, the Harper government promised to review the rules after an uproar from small business groups. However, in 2016 the Trudeau government announced that the review was complete and there would not be any changes.

Campground owners will meet with financial officials next month however, some say due to the financial constraints they could be forced to sell.

With a report from CTV’s Omar Sachedina in Ottawa