Advertising options have grown exponentially in recent years. Many types of advertising even cost nothing but time. You can buy ads on a number of social networks to reach your target market, or if you want to go the free route, you can create a social media account, post regularly and build an audience. Alternatively, you can set up a website that you can then optimize to be displayed by Google and other search engines when someone searches for your product or service.

When it comes to expenses, most types of advertising are deductible, with some specific exceptions.


While advertising is often used synonymously with marketing, in an accounting context it often refers specifically to actual advertisements such as:

  1. Printed publications, newspapers, etc.
  2. Television commercials
  3. Google, Facebook, Amazon, Pinterest, Instagram, Tik Tok, Etsy, or any other social media ads

Note: The CRA has implemented a new rule for digital companies (many of which are advertisers) requiring them to register for GST/HST and/or QST if their sales to Canadians exceed $30,000. Many of these companies meet the criteria for mandatory registration, but for companies that do not have a Canadian presence, it works a little differently. In this case, you do not have to pay GST/HST or QST on these services if you are registered for sales tax and provide your registration numbers to the foreign seller (they will send you an email asking for this information). It is important to report these numbers to avoid paying sales tax as they are not technically deductible on GST/HST/QST returns.

For more information, get in touch with tax preparation services before proceeding with income tax filing.

Website Costs

Any costs incurred in setting up and maintaining your website usually fall under your marketing/advertising costs, as the website is a promotional tool. Some of these costs include:

  1. Website hosting and development costs
  2. Search engine optimization services
  3. The cost of purchasing domains related to your business
  4. Commissions for website builders like Squarespace or Wix
  5. Email marketing services like MailChimp or MailerLite for which you pay monthly/annual fees

Note: Website development costs can often be substantial. If these costs are more than a few hundred dollars, they should be capitalized rather than expensed. This means that you record them as assets and depreciate them over time. CCA class is usually class 10 or class 12.

Promotional Material

There are a number of costs that can be incurred in promoting your business, including:

  1. Business cards
  2. Pens, mugs, t-shirts, and other branded items
  3. Brochures, pamphlets, and newsletters that you can deliver or mail to potential customers
  4. Samples of your product

For more information, get in touch with tax preparation services before proceeding with income tax filing.


While conferences can be a little expensive, they can be a great way to get your product exposure and credibility. Please note that there are specific rules regarding the deductibility of Congress expenses. Costs associated with conferences can be:

Rent a booth/table at a conference or show

Travel expenses including airfare and hotel to the conference for owners and employees

Creative Services

Creative marketing services may include:

  1. We outsource the logo design to a third party
  2. Graphic design and layout of promotional and marketing materials, including on gig platforms like Fiverr and Upwork
  3. Suggest a subscription to software like Canva or Adobe Photoshop

Other Marketing Costs

  1. Signage for your shop or business
  2. Social media costs, such as outsourcing to a social media manager or subscribing to social media services (although the basic subscription is usually free, you can upgrade to corporate services)
  3. Affiliate commissions may be the result of an internal program developed to incentivize other individuals or businesses to promote and sell your product or service.
  4. Brand development costs, including paying brand managers or sponsoring events that promote your brand
  5. Wages for employees in the marketing department
  6. Commissions and salaries to sellers who sell your product
  7. Costs of catering and entertainment

Please note that special exclusions apply to them. Generally, 50% of dining and entertainment expenses are deductible and must be spent negotiating business with a client or employee. Gifts to customers are deductible based on certain criteria, which are detailed in the article on the deductibility of customer gifts

Chart of Marketing Expense Accounts

The chart of accounts should reflect a meaningful allocation of your marketing and advertising costs. The details in the chart of accounts depend on which line items are important to track and analyze. You can use any nomenclature that gives you maximum clarity when reviewing profit and loss statements and other expense reports. You can also have sub-accounts for more detail. And while the details can be very helpful in analyzing your expenses, you need to make sure you don’t have too many accounts because it can be overwhelming.

Other ways to categorize accounts might be using tags or class and location tracking in online accounting software. This is especially useful if you use a different marketing strategy for different products and services or geographies. By adding a tag or class, you can track spend based on the classification you specify and monitor the effectiveness of your strategy.

A typical chart of accounts for marketing/advertising expenses might include the following:

  1. Advertising
  2. Dining and entertainment
  3. salaries
  4. Conference
  5. Promotional material

Each of these accounts may have sub-accounts for categories where spending may be more significant.

Specific Deduction Criteria for CRA

The following restrictions apply specifically to print, e.g. magazines and newspapers, or broadcast, e.g. television advertising

Certain limitations apply to the number of expenses you can deduct for periodical advertising. If your advertising is targeted to the Canadian market and the original editorial content in the issue is 80% or more of the total non-advertising content in the issue, you can deduct all costs. You can deduct 50% of your spending if your magazine advertising is directed to the Canadian market and the issue’s original editorial content is less than 80% of the issue’s total non-advertising content.

Advertising expenditures directed primarily to the Canadian market are not deductible if the foreign broadcaster’s advertising constitutes less than 80% of the editorial content in the publication of the total non-advertising content in the publication. When advertising with a foreign broadcaster, the cost of advertising aimed primarily at the Canadian market cannot be deducted.

For more information, get in touch with tax preparation services before proceeding with income tax filing.

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