Section 19.1

Subsection 19.1(1) - Limitation re advertising expense on broadcasting undertaking

Administrative Policy

12 July 2017 Ministerial Correspondence 2017-0697761M4 F - Publicité des plateformes Web étrangères

ads by Canadian advertisers on foreign websites generally are deductible
2017-0691521M4 and 2017-0697751M4 are essentially identical

After noting that the ss. 19 to 19.1 rules, which essentially deny a deduction for ads directed at the Canadian market on foreign broadcasting, newspaper and periodical outlets, “do not apply to the deductibility of advertising expenses on foreign Internet websites,” CRA stated:

The Department of Finance…is aware of this issue and of the CRA’s position.

20 June 2017 Ministerial Correspondence 2017-0697751M4 - Deductibility of foreign online advertising

issue that deductions for ads by Canadian advertisers on foreign websites are not limited by the ss. 19 to 19.1 rules is with Finance
2017-0691521M4 is essentially identical

After noting that ss. “19, 19.01, and 19.1… limit or deny the deductibility of expenses for advertising in a broadcast or an issue of a newspaper or periodical when certain Canadian content or Canadian ownership requirements are not met,” CRA stated that it:

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…is aware of this issue and of the CRA’s position.

23 November 1999 TI 990781

A fee paid "for the purpose of preventing or limiting others from advertising during certain time slots or controlling who can advertise in those time slots" would not represent an expense incurred for an advertisement and, accordingly, would not be limited by s. 19.1.

Subsection 19.1(2) - Exception

Administrative Policy

18 July 1991 Memorandum (Tax Window, No. 6, p. 13, ¶1360)

Discussion of factual criteria respecting whether a particular advertisement is directed primarily to a market in Canada.

Where an advertisement directed to a foreign market is paid for by a Canadian corporation for the benefit of a related foreign corporation, s. 19.1 would not apply but the advertising expense may be disallowed on the basis that it is not related to the business of the Canadian corporation.