By Robert Madsen
Summer 2013 is now in the books, and a recap of self-storage activity in Canada would appear typical for the season. But if you peel this onion, you’ll find the Canadian industry broke ground on some very new terrain. From court action to Hollywood hopefuls, here’s insight from the Canadian Self Storage Association (CSSA) about local happenings that continue to take shape.
CSSA Takes CRA to Court
While Canadians enjoyed a gorgeous summer, the CSSA legal team was hard at work preparing its case against the Canada Revenue Agency (CRA). In 2009, the CRA took one particular self-storage operator to task, assessing fines and penalties on his seven-year-old, 450-unit facility. Total expenses, including accounting and legal fees, were in excess of $500,000. Eventually, the operator had to sell the business to cover his costs.
For the first and only time, the CRA cited a decades-old tax law to claim that this very competitive and active self-storage operation was truly operating as a passive business. The fact that the operator had an extremely busy day-to-day operation involving unit rentals and vacates and other sales activity to keep his facility full and profitable seemed to fall on deaf ears. Claiming the operator had been incorrectly filing his taxes, the CRA charged him three years of back taxes and other fines.
The CSSA is intent on going to court to set a precedent that establishes, once and for all, that self-storage is a very active enterprise. A win will allow the association to lobby the national government and CRA to correct the tax law so it properly reflects our business operation. This will ensure self-storage operators are taxed at more favorable rates that better recognize their daily contributions to the economy.
The court dates will likely be set for next spring. Canadian self-storage operators are encouraged to contact the CSSA administrative office and make a donation to this ever-important campaign.
Property-Assessment Victory, Concerns Continue
Self-storage operators in Ontario breathed a sigh of relief this year as they stepped forward to pay their property taxes. Relief came from a CSSA-led battle to maintain property assessments on the current cost approach for appraising real estate.
The Municipal Property Assessment Corp. (MPAC) continues to look for justification to move to an income approach, which would result in significant consequences to property assessments and, ultimately, taxes. Moreover, this approach would heavily penalize well-run storage operations that have been able keep costs low and revenue in place during already trying times. The attempted shift would be extremely backward.
The CSSA Ontario Property Tax Committee continues to provide guidance on the issue. MPAC is now taking a softer approach and encouraging self-storage facilities to submit their information on a voluntary basis. The CSSA reminds operators that they have rights, and those in Ontario are advised to speak with the association to find the best way to proceed. By working together, operators can help to ensure property taxes are calculated in a more fair and equitable manner.
‘Storage Wars’ Comes to Canada
The first of 36 episodes of "Storage Wars Canada" premiered on Aug. 29. The show, which originally started in California in 2010, has finally made its way north, with all the current episodes filmed in Ontario. Reports of significant fanfare have already been noted, and the filming portion has been off to a good start.