Ok so we all know the old adage the two things for certain in life are death and taxes right, for some fitness businesses the tax can cause their death.

Such is the case in BC and Ontario Canada as both provinces are introducing a Harmonized Sales Tax (HST) come July 2010. The HST is a combination of the Goods and Service Tax (GST) and the Provincial Sales Tax (PST). Currently fitness memberships and service are exempt for PST in both Provinces, so what does HST mean for the fitness industry in these two regions, simply put it equals a 7% increase for BC and an 8% increase in Ontario on all fees and services the business offers. It is a forced fee increase that turns a business based on health and wellness into a tax collector for government and has no benefit to the business.

It may seem small to add another $5-20.00 per month to these fees but add to this the possibility of new and higher tariffs from the Society of Composers, Authors and Music Publishers of Canada (SOCAN) and the proposed 5% tariff on gross sales from the Neighboring Rights Collective of Canada (NRCC) and you suddenly have an industry that is here to help people stay healthy, fit and active feeling a little sick to their stomachs.

Below is a breakdown of what a fitness company will pay in taxes and tariffs based off their potential sales and income.

Club Size - Members	Small - 500	Medium - 1500	Large - 5000
Estimated revenue (exclusive of tax) based on $600/member	$300,000	$900,000	$3,000,000
NRCC 5% Tariff on Gross Sales	$15,000	$45,000	$150,000
NRCC Group X Tariff (20/30/50 classes per week) $3.00 per class	$3,120	4,680	$7,800
Current SOCAN tariff	$642	$963	$1605
SOCAN Tariff 15 (If enforced) $11.46 per sq/ft 3,000/6,000/10,000	$344	$688	$1,146
Total Tariffs	$19,106	$51,331	$160,551
Taxes
BC (only) New HST 12%	$36,000	$108,000	$360,000
Federal and Provincial corporate taxes (based on a 20% income from sales) BC 13.5% - 22%	$8,100	$24,300	$132,000
Total Tax collected & paid	$44,100	$132,300	$492,000
Total Tax and Tariffs	$63,206	$183,631	$652,552

 

For our American neighbors remember this could happen to you and with your business tax rate sitting in the 35% range the last thing you need are more taxes.

Australia has been a legal battle for some time trying to stop these same tariffs they are facing a potential 3000% increase in fees. This threat is looming in the US as well and organizations such as IHRSA are taking action now, so check out what you as a fitness professional can do because if you ever have a dream of getting bigger and opening your own gym or Boot Camp franchise then you need to get involved now. Be active in your federal and state taxation for businesses and look at who is pushing new music tariffs in your region.

In Canada get involved and help support the legal challenges to the NRCC proposed tariff go to the Fitness Industry Council of Canada and learn more about how to help.  No single thing that can bring down your dreams quicker than being side swiped by organizations and government.

Go get involved no matter how small your fitness business is this will affect you and your clients or members in a negative way so post signs in your gym get member to sign petitions and let's put a stop to the tax and tariffs that are kill our industry and livelihood. 
For list of who wants your money go to the following links: In Canada in the US and globally