Skip to main content
The Globe and Mail
Support Quality Journalism.
The Globe and Mail
First Access to Latest
Investment News
Collection of curated
e-books and guides
Inform your decisions via
Globe Investor Tools
per week
for first 24 weeks

Enjoy unlimited digital access
Enjoy Unlimited Digital Access
Get full access to
Just $1.99 per week for the first 24 weeks
Just $1.99 per week for the first 24 weeks
var select={root:".js-sub-pencil",control:".js-sub-pencil-control",open:"o-sub-pencil--open",closed:"o-sub-pencil--closed"},dom={},allowExpand=!0;function pencilInit(o){var e=arguments.length>1&&void 0!==arguments[1]&&arguments[1];select.root=o,dom.root=document.querySelector(select.root),dom.root&&(dom.control=document.querySelector(select.control),dom.control.addEventListener("click",onToggleClicked),setPanelState(e),window.addEventListener("scroll",onWindowScroll),dom.root.removeAttribute("hidden"))}function isPanelOpen(){return dom.root.classList.contains(}function setPanelState(o){dom.root.classList[o?"add":"remove"](,dom.root.classList[o?"remove":"add"](select.closed),dom.control.setAttribute("aria-expanded",o)}function onToggleClicked(){var l=!isPanelOpen();setPanelState(l)}function onWindowScroll(){window.requestAnimationFrame(function() {var l=isPanelOpen(),n=0===(document.body.scrollTop||document.documentElement.scrollTop);n||l||!allowExpand?n&&l&&(allowExpand=!0,setPanelState(!1)):(allowExpand=!1,setPanelState(!0))});}pencilInit(".js-sub-pencil",!1); // via darwin-bg var slideIndex = 0; carousel(); function carousel() { var i; var x = document.getElementsByClassName("subs_valueprop"); for (i = 0; i < x.length; i++) { x[i].style.display = "none"; } slideIndex++; if (slideIndex> x.length) { slideIndex = 1; } x[slideIndex - 1].style.display = "block"; setTimeout(carousel, 2500); } //

Canadian Federation of Independent Business president Dan Kelly believes that the rule is 'insulting' to small business owners.

Chris Young/The Canadian Press

Campground owners across Canada could face much higher tax bills after a federal tax court recently rejected one Ontario company’s claim that it should be eligible for the small-business tax deduction.

The ruling relates to a long-standing dispute between the industry and the Canada Revenue Agency (CRA) over the eligibility of campground owners to get the small-business deduction (SBD), considered the most beneficial of all tax deductions available to corporations in Canada.

The Income Tax Act says the SBD deduction isn’t available to a “specified investment business" if its main purpose is to earn income such as interest, dividends, rents and royalties from the property. An exception is if the corporation employs more than five full-time employees in that business throughout the year. Some believe the rule is intended to crack down on owners of investment properties trying to qualify for the SBD, and that campgrounds have been caught in the crosshairs.

Story continues below advertisement

“Campgrounds are very different and we find this rule insulting to those small business owners,” Canadian Federation of Independent Business president Dan Kelly said.

The recent judgment involves the Lost Forest Park campground in Burlington, Ont., which fought a 2015 notice of reassessment that rejected its claim for the SBD in the 2012, 2013 and 2014 tax years.

According to the court document, the government said the company didn’t qualify since it got most of its income from renting out “seasonal and extended seasonal campsites” as well as the storage of recreational vehicles, and didn’t have at least five full-time employees.

The owner argued the business provides a "significant bundle of services" that go beyond earning income from the property that are "integral to the success" of the operations.

The owners, who declined to be interviewed for this article, appealed the decision but lost. In the decision dated Aug. 29, Justice Guy Smith concluded that the services and amenities offered at the site “were not sufficient to reach the ‘tipping point where the provision of services overcome the provision of property’” and said the length of the occupancy agreements “suggests quite clearly that the principal purpose of the business was to derive rental income.”

A CRA spokesperson declined to comment on the case other than to say the business has 30 days from the date of the tax court decision to appeal to the federal court of appeal.

Alexandra Anderson, executive director of Camping In Ontario, which represents about 430 campground owners in the province, said she and the owners are in “a state of shock” over the ruling and are discussing an appeal with their legal counsel.

Story continues below advertisement

She also describes the court ruling as "disheartening," because it suggests campground owners are simply landlords.

"Campgrounds require a tremendous amount of work to turn a profit,” she said, citing tasks such as land and park maintenance, septic, waste and water management as well as marketing and advertising for their business. "It is illogical for the CRA, federal government and the courts to claim campgrounds are an 'inactive' business.”

Ms. Anderson believes the concept of camping is also lost in the ruling. "Campgrounds are recreational, most people don't live in them. They all have a permanent residence. It's not their home, it's where they go for recreation," she said. "If campgrounds didn't have swimming pools, lakes and rivers and things to do, nobody would go. That, in this decision, has been ignored, the recreational side of the business which is why we are in business."

Blake Richards, the Conservative Member of Parliament for Banff Airdrie and opposition critic for small business and tourism, said the former Conservative government committed to reviewing the rules in 2015. According to the CRA, the issue was raised in the current Liberal government’s pre-budget consultations held early 2016, but no changes were made.

Mr. Richards says he has been fighting to revisit the review since and worries that, the rules, if left as is, could force many small private campgrounds to close because of the higher taxes they would have to pay.

There are about 1,500 incorporated campgrounds across Canada, according to Camping In Ontario, citing data from Industry Canada.

Story continues below advertisement

Mr. Richards plans to make the tax treatment of campgrounds an election issue.

"I want to make sure that campers in Canada are well aware of what's going on," he said. "We could see a lot of campgrounds shut down in this country. It's actually already hard to find a campsite in this country as it is."

A spokesperson for the Minister of National Revenue declined to comment on the specific case but said the government supports small business and emphasized that "we have not changed the long-standing rules surrounding the small business deduction. The same provisions still apply."

Candace Nancke, managing partner at Loren Nancke Chartered Professional Accountants in British Columbia, believes the intention of the rule was to ensure income that requires little effort doesn’t benefit from an active business deduction.

"The issue is that there is the grey area for rent and the 'effort' measurement is flawed," she said.

“Over the years and as cases are layered on, the word rent has been rigidly adhered to, but I don’t think all rent income can be painted with the same brush. Some require significantly more effort than others and to imply that all rent falls into the same category of other low effort income types such as royalties and dividends is probably unfair.”

Your Globe

Build your personal news feed

  1. Follow topics and authors relevant to your reading interests.
  2. Check your Following feed daily, and never miss an article. Access your Following feed from your account menu at the top right corner of every page.

Follow the author of this article:

Follow topics related to this article:

View more suggestions in Following Read more about following topics and authors
Report an error Editorial code of conduct
Due to technical reasons, we have temporarily removed commenting from our articles. We hope to have this fixed soon. Thank you for your patience. If you are looking to give feedback on our new site, please send it along to If you want to write a letter to the editor, please forward to

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff. Non-subscribers can read and sort comments but will not be able to engage with them in any way. Click here to subscribe.

If you would like to write a letter to the editor, please forward it to Readers can also interact with The Globe on Facebook and Twitter .

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff. Non-subscribers can read and sort comments but will not be able to engage with them in any way. Click here to subscribe.

If you would like to write a letter to the editor, please forward it to Readers can also interact with The Globe on Facebook and Twitter .

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff.

We aim to create a safe and valuable space for discussion and debate. That means:

  • Treat others as you wish to be treated
  • Criticize ideas, not people
  • Stay on topic
  • Avoid the use of toxic and offensive language
  • Flag bad behaviour

If you do not see your comment posted immediately, it is being reviewed by the moderation team and may appear shortly, generally within an hour.

We aim to have all comments reviewed in a timely manner.

Comments that violate our community guidelines will not be posted.

Read our community guidelines here

Discussion loading ...

To view this site properly, enable cookies in your browser. Read our privacy policy to learn more.
How to enable cookies