A Guide to Advertising Tax Deductions for Canadian Small Businesses
If your ad campaign is targeting a Canadian audience, there is a good chance you can benefit from advertising tax deductions in Canada. Here’s a quick guide on how it works.
Advertising your business on Canadian-based Radio or TV networks makes your advertisement expenses fully deductible. This is because radio and TV media are region-specific. However, if you advertise with international networks, the restrictions will apply even if your target is the Canadian audience.
Periodical content is any recurring print or publication like newspapers, journals, or magazines. BUT, the CRA guidelines allow your advertising expense to be only fully deductible as long as 80% of the content in the publication is original and editorial content. For example, a newspaper would be eligible; a magazine comprised of mostly adverts would not be.
If you advertise on a publication with less than 80% original editorial content, you are allowed to claim 50% of your advertisement cost. A fashion magazine that has a lot of branded content is a good example.
These deductions will apply if your promotions are on Canadian media, and they target the Canadian audience.
Promoting your business online
Online advertising is one of the easiest expenses to claim. Types of advertising include banner ads, paid search campaigns (PPC) and even your website hosting fees.
Per section 19 of the Canadian Income Tax Act, ads in print or publications that are non-Canadian are not deductible, but in 1996 the Canadian government decided this restriction does not apply to online publications. Websites can be accessed by anyone at any time (are not Canadian specific) and therefore are not subject to the same broadcast laws as other mediums such as TV or radio.
Because of this loophole, so if you advertise online, even an internationally owned website, you can deduct the expense.
Entertainment or meals
You can write off half of your entertainment and meal expenses if they are related to promoting your business and creating brand awareness. When you meet a prospective client, business partner, or an investor for a one-on-one business chat, and you incur meals or entertainment expenses, 50% are tax deductible.
Attending business conventions or trade shows
According to the CRA, you can write off the costs for two conventions each year. You can also write off the cost that amounts to half of the food that you will buy. But be careful:
- You must have attended the conference “in connection with the business”
- The convention must be held in a location that is “at a location that may reasonably be regarded as consistent with the territorial scope of that organization” (so, no scoping out tenuously connected trade shows in Hawaii).
Do you have tax-related questions about your small business? Contact us and book a consultation with one of our tax planning experts to find out how you can maximize your tax savings for your business’ year-end.
- Small Business Deduction Unveiled: A Comprehensive Guide for Canadian Entrepreneurs - January 25, 2024
- Navigating Independent Contractor Taxes in Canada: A Comprehensive Guide - November 28, 2023
- What is a shareholder loan? A comprehensive guide for Canadian Corporations - October 25, 2023