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.
Please note that the following document, although believed to be correct at the time of issue, may not represent the current position of the Department.
Prenez note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle du ministère.
Principal Issues: Are expenditures to control advertising time slots to be considered as an "advertisement" for the purposes of section 19.1?
Reasons: The expenditures cannot be considered as expenditures on an "advertisement".
November 23, 1999
Re: Section 19.1 - Fees to prevent others from advertising in certain time slots
We are writing in response to your letter dated March 9, 1999, wherein you have described a particular type of expenditure and query whether the provisions of section 19.1 of the Income Tax Act (the Act) would apply to deny a deduction for that expense.
In particular, you are referring to payments to be made by a Canadian taxpayer to a "foreign broadcasting undertaking" as defined in subsection 19.1(4). The Canadian taxpayer's fee is for the purpose of preventing or limiting others from advertising during certain time slots or controlling who can advertise in those time slots.
Section 19.1 serves to deny a deduction for an outlay or expense of a taxpayer "for an advertisement directed primarily to a market in Canada and broadcast by a foreign broadcasting undertaking".
The term "advertisement" is not defined for this provision or for any other purpose of the Act. Thus, to assist in determining the meaning of that term we refer to its normal meaning. In this regard we refer to the dictionary meaning (Webster's New World Dictionary) which defines "advertisement" as:
the act of advertising, or
public notice or announcement, usually paid for, as of things for sale, needs, etc.
The definition of "advertise" provided in the dictionary is:
to tell about or praise (a product, service, etc.) publicly, as through newspapers, handbills, radio, television etc., so as to make people want to buy it
In our view, the type of expenditure described above would not be considered to be in respect of an advertisement and thus the provisions of section 19.1 would not be applicable thereto.
We trust our comments will be of assistance to you.
Resources, Partnerships and Trusts Division
Income Tax Rulings and Interpretations Directorate
Policy and Legislation Branch
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