Canada’s Health Clubs Pitching For Tax Credit: Conservatives Under Pressure To Honour Poll Pledge

Canada’s health clubs are lobbying the Stephen Harper led Conservative government to act on its promise of tax breaks for adults owning gymnasium and health club memberships. According to reports, leading healthclub chain, Goodlife Fitness Centres has hired a Toronto-based firm, Crestview Strategy, to lobby for the tax credit with the Finance ministry and Prime Minister’s Office. This was one of the poll promises made by the Conservatives in their 2011 election manifesto. Goodlife is Canada’s top health club chain with its network of more than 300 clubs and gyms spread across the country.

The Tories made the promise that a tax credit of CA $500 per person will be implemented during their first majority mandate and when the budget is balanced. It has already honoured the pledge of income splitting for families.

Budget on April 21

The move comes in the wake of the run upto the Federal budget, which the Finance Minister Joe Oliver will be presenting on April 21. The Fitness Industry Council of Canada, an industry trade group, also urged the government to act on the poll promise, saying it would cut healthcare costs and bring about tremendous savings for both federal and provincial governments to the tune of CA $1.1 billion by 2029.

The 2011 platform had committed that the proposed tax credit will seek to cover registration fees for “fitness activities,” implying a deduction in costs for adult sports league fees, ski lift passes and other pursuits. Noting that physical fitness will pre-empt major health problems and improve overall well-being, the plan mooted encouraging a huge range of activities in achieving these goals -- from hockey at the rec centre to time spent on the treadmill.

Boutique Tax Credits

However, the Conservatives do not want to throw a big largesse as an all encompassing tax credit, Rather, the Harper government favours the so-called “boutique tax credits” to be bestowed on middle-class families, unlike the previous Liberal government's plan to to give it for all.

The costs of implementing the credit for adults of all ages will be CA $69 million in the first year and $275 million in years down the line. Estimates by the Parliamentary Budget Officer have pegged the cost for offering the credit to those aged 55 at a maximum of CA $47 million per annum. Observers see the tax credit will be a boon for the fitness club industry and will be like a subsidy coming from the taxpayers’ money.

New Funding

Meanwhile, Penfund, an independent provider of capital to middle market companies in North America announced the completion of a CA$70 million of credit to GoodLife Fitness Centres Inc, according to a Press Release.

GoodLife is the largest fitness company in Canada and the fourth largest operator of fitness clubs in the world. David 'Patch' Patchell-Evans, GoodLife's founder and CEO, said, “We greatly value the continuing support of Penfund and our other lenders. The CA $70 million facility provided by Penfund is the fifth in a series of financings provided and arranged by Penfund, aggregating CA $310 million in total. This long term and flexible capital allowed us to accelerate our growth and pursue our purpose of giving every Canadian the opportunity to live a fit and healthy good life.”

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