Friends of Canadian Media call for Gov’t to close ad tax loophole

The non-profit organization wants to stem the flow of Canadian ad dollars going to Facebook, Google and other foreign digital media.

In the run up to the April 16 release of the 2024 federal budget, Friends of Canadian Media has renewed its call for the closure of a tax loophole in the Income Tax Act. The organization is referring to the ability of Canadian businesses to claim tax deductions for advertising on foreign digital media like Facebook and Google. Friends claims in its updated report that because of this deduction, over $13 billion in ad revenue is removed from the Canadian economy each year.

Sarah Thompson, president of Dentsu Media and fervent proponent of supporting Canadian media, says it important to have a thriving Canadian media ecosystem, not just for the social benefit it provides for culture and news of our country but also for advertisers to reach everyone in spaces they trust and give attention. “We know Canadian media works incredibly well as a place for return on investment for brands and moves like this creates more opportunity.”

“In two weeks, we have another local media day at Dentsu for our teams to keep them inspired around Canadian media and what is possible with these great partners. We all need to do more to ensure the plans we make are the best investment strategies possible.”

The updated Close the Loophole! The Deductibility of Foreign Internet Advertising paper takes the position that it is well past time for the Income Tax Act (ITA) to be revised to reflect current internet realities. The government began introducing amendments to the ITA to eliminate or limit the deductibility of ad spending on foreign newspapers, periodicals and broadcasters, as an incentive for advertisers to choose Canadian alternatives and protect Canadian media from unfair competition, preserve Canadian jobs and voices, and keep Canadian media Canadian.

With much if not most internet advertising by Canadians today on media that are, by definition, foreign broadcast and newspaper services or their modern equivalents, Friends says the diversion of ad revenue is having a negative impact on Canadian-owned media. Friends of Canadian Media first raised this issue in 2017 when foreign digital media services were snapping up one-third of all Canadian ad revenues. Today the group says that has grown to two-thirds of ad revenue.

Friends of Canadian Media is a non-partisan citizens’ movement that stands up for Canadian voices in Canadian media – from public broadcasting to news, entertainment, culture, and online civil discourse. It is a not-for-profit organization that receives no government funding or donations from political parties or CRTC-regulated entities.