CRVC strongly advocates that the Government of Canada recognize the income earned by campgrounds as “active business income” for the purpose of determining eligibility for the small business deduction

Small Private Campgrounds throughout Canada continue to advocate the Federal Government to endorse change in the current Income Tax Act or enact other legislative measures that clearly distinguish small family run campgrounds with less than 5 full time employees as an “active business” and thus eligible for the small business tax deduction.

Income Tax Act s. 125(7)

A specified investment business is a corporation whose principal purpose is to derive income (interest, rent, dividends and royalties) from property, unless the business employs more than 5 full time employees. Income from property would include rental or leasing income from land or buildings, but would exclude income from renting or leasing moveable property such as machinery and equipment. A specified investment business is not eligible for the small business deduction and the income is taxed in the corporation in the same way that investment income is taxed.

A change in interpretation by CRA in the past 3 years has resulted in a number of small Private Campgrounds denied the Small Business Tax Deduction and re-assessed at an Investment Rate, some retroactively 2-3 years, resulting in a corporate tax rate increase to nearly 50% vs 14%.
The classification of a Campground being assessed as a “Specified Investment Business” is ambiguous and up to arbitrary determination by the Canada Revenue Agency and the issue remains to be the #1 threat to not only Private Campgrounds, but to all RV and Camping Industry Stakeholders.