Principal Issues: Ministerial correspondance - One of several emails received regarding the deductibility of fees for advertising on foreign web platforms.
Position: Sections 19, 19.01 and 19.1 do not apply to restrict or limit the deductibility of advertising expenses on foreign web platforms.
Reasons: These sections of the Act only apply to advertising expenses made in newspapers, periodicals or through broadcasting. A reference was made to the Department of Finance.
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Dear Sir,
The office of the Right Honourable Justin Trudeau, Prime Minister of Canada, sent me a copy of your correspondence concerning the tax deductibility of foreign online advertising. Thank you for your understanding regarding the delay in my response.
Advertising expenses related to earning income are generally deductible, provided the expenses are made to earn income from a business or property. However, sections 19, 19.01, and 19.1 of the Income Tax Act limit or deny the deductibility of certain expenses. These includes expenses incurred for advertising in a broadcast or an issue of a newspaper or periodical when certain Canadian content or Canadian ownership requirements are not met.
The Canada Revenue Agency (CRA) has considered the deductibility of Internet advertising expenses and concluded that the above-noted rules do not apply to the deductibility of advertising expenses on foreign Internet websites.
The Department of Finance, which is responsible for tax policy and the development of tax legislation, is aware of this issue and of the CRA’s position.
I hope that this information will be of assistance.
Best regards,
The Honourable Diane Lebouthillier
Minister of National Revenue
2017-069533
Nancy Deslandes
2017-07-12