Section 19 of the Income Tax Act and Claiming a Deduction for Advertising in Periodicals: The New Criteria

What is Section 19?

Section 19 is the part of the Income Tax Act that describes the conditions under which a Canadian advertiser may deduct from taxable income the expenses related to advertising in a periodical or a newspaper.

The agreement on periodicals that Canada signed with the United States on June 3, 1999 required that the Canadian government make certain amendments to this section with respect to the allowable deductions for advertising in periodicals. These amendments came into effect on June 1, 2000.

Section 19 Before June 1, 2000

Until June 1, 2000 - in order to claim expenses incurred for advertising in a magazine as a tax deduction - section 19 required that three basic criteria be met:

1) that the magazine be published in Canada;

2) that the magazine be at least 75% Canadian-owned; and

3) that no more than 20% of the magazine's non-advertising content be the same as any other magazine that was printed, edited or published outside Canada.

If these conditions were satisfied, then an advertiser's relevant expenses could be deducted from taxable income at a rate of 100%.

Section 19 on June 1, 2000 and Beyond

The amendments being made to section 19 will in no way affect the criteria for claiming a deduction for advertising in newspapers. Any newspaper in which an ad is placed will still have to be edited and published in Canada and will still have to be at least 75% Canadian-owned for the advertiser to be able to claim a full deduction. These amendments do not change the criteria for claiming a tax deduction with respect to broadcasting.

The criteria, however, have changed with respect to magazines. Beginning on June 1, 2000 neither the nationality of a magazine nor its place of publication will be the criteria upon which an advertiser's ability to claim expenses as a deduction will depend. Rather, the level of original editorial content that appears in a magazine will determine the level of the deduction an advertiser can claim.

Therefore, from June 1 forward, expenses for advertising in magazines will be deductible at a rate of:

1) 50% for advertisements placed in a magazine, the original editorial content of which is less than 80%

or

2) 100% for advertisements placed in a magazine, the original editorial content of which is equal to or greater than 80%.

For Further Information

If you have questions or would like more information on section 19 and its administration, please contact the Research, Analysis & Compliance unit of the Department of Canadian Heritage through any of the means listed below:

Pierre Lalonde, Chief, Research, Analysis & Compliance Unit:

  • Tel: (819) 997-5440
    Fax: (819) 994-3154

Regular mail:

  • Research, Analysis & Compliance Unit
    Publishing Policy & Programs
    Department of Canadian Heritage
    Les Terrasses de la Chaudière
    15 Eddy St., 4th Floor
    Hull, Québec
    K1A 0M5

Website:

June 1, 2000

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