Please note that the following document, although believed to be correct at the time of issue, may not represent the current position of the CRA.
Prenez note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle de l'ARC.
Principal Issues: Whether a Canadian licensed real estate agent who advertises in a foreign newspaper for the purpose of encouraging clientele in the foreign country to purchase real estate that the agent has listed for sale in Canada, is restricted in the deductibility of the advertising expense because of section 19 of the Income Tax Act.
Position: Section 19 of the Act will not preclude the deduction of an otherwise deductible advertising expense for an advertisement in a non-Canadian newspaper or periodical that is directed at a market located outside of Canada.
Reasons: Section 19 of the Act precludes the deduction of advertising expenses to the extent they are incurred for advertisements directed at the Canadian market and placed in newspapers or periodicals that do not meet certain Canadian ownership criteria.
XXXXXXXXXX Randy Hewlett, B. Comm.
2004-007138
June 11, 2004
Dear XXXXXXXXXX:
Re: Deductibility of Advertising Expenses
We are writing in response to your e-mail of April 14, 2004, wherein you requested our opinion on the above-noted issue.
You inquired whether a Canadian licensed real estate agent who advertises in a foreign newspaper for the purpose of encouraging clientele in the foreign country to purchase real estate that the agent has listed for sale in Canada, is restricted in the deductibility of the advertising expense because of section 19 of the Income Tax Act (the "Act").
Written confirmation of the tax implications inherent in particular transactions is given by this Directorate only where the transactions are proposed and are the subject matter of an advance income tax ruling request submitted in the manner set out in Information Circular 70-6R5, Advance Income Tax Rulings, dated May 17, 2002. Where the particular transactions are completed, the inquiry should be addressed to the relevant Tax Services Office. However, we are prepared to offer the following comments.
Section 19 of the Act precludes the deduction of advertising expenses to the extent they are incurred for advertisements directed at the Canadian market and placed in newspapers or periodicals that do not meet certain Canadian ownership criteria. In our view, section 19 of the Act will not preclude the deduction of an otherwise deductible advertising expense for an advertisement in a non-Canadian newspaper or periodical that is directed at a market located outside Canada.
We trust our comments are of assistance.
Yours truly,
Randy Hewlett, B.Comm.
for Director
Business and Partnerships Division
Income Tax Rulings Directorate
Policy and Planning Branch
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