Google Adwords Are Not Tax Deductible
Sunday August 26, 2007
"Nowadays Canadian businesses use Google Adwords to be visible to potential clients on the Internet. My company is not an exception. We pay good amounts to Google for Adwords. But I know Google is an American company. ..Can I deduct our expenses for Google advertising if it is not a canadian source?"-"Seolen" via the About Small Business Canada Forum
In my reply I wrote:
You are right to be cautious. In Income Tax Deductions for Small Businesses I said:
"...the Advertising section of the CRA's Business and Professional Income Guide cautions that you can't deduct expenses "for advertising directed mainly to a Canadian market when you advertise with a foreign broadcaster; or in an issue of a non-Canadian newspaper or periodical.""I also advised Seolen to give the Canada Revenue Agency a call as neither Adwords nor Internet Advertising is specifically mentioned in the Guide.
He did, and the CRA's response sheds an interesting light on the whole issue of tax deductions that is worth paying attention to.
Seolen wrote:
"Just spoke to a CRA representive. I was told that I can deduct advertising expenses from Canadian sources only! As we know Google is not a Canadian source, Google adwords are not deductible. That means if something is not mentioned as permitted it is prohibited." (Italics mine)Good advice to bear in mind when you're dealing with income tax deductions of any kind.
For more information on specific potential income tax deductions for small businesses, on this site see:
Comments
Peter Hrabinsky and I were corresponding about this question and sent me this email today:
“I received a call from a senior CRA representative and they confirmed to me that Google Adwords are an acceptable business expense and that the “foreign broadcasting” reference is different from an Adwords expense.” (April 28,2009)
So it looks like you can legitimately claim Adwords as a business expense. Sometimes I enjoy being wrong!