Senate committee urges government to study tax measures hurting Canada’s fragile news media industry

The federal government should study the idea of changing tax measures that encourage news media advertisers to spend money with foreign companies, hobbling Canada’s already declining news industry, a Senate committee recommended in a report released Tuesday.

The Senate Committee on Transport and Communications report, The Tax Deductibility of Foreign Internet Advertising in Canada, recommends the government study Section 19 of the Income Tax Act, which makes advertising in newspapers, magazines and online publications a tax-deductible expense.

Foreign-based companies such as Facebook and Google account for as much as 80% of Canadian online advertising revenues. Those companies compete for advertisers with traditional Canadian broadcast and print media outlets.

Witnesses representing various segments of Canada’s media industry told the committee that eliminating tax deduction for ads on foreign internet news outlets could give the domestic news industry a much-needed boost. However, other witnesses told the committee that eliminating the tax deduction could put Canadian businesses at a disadvantage relative to their international competitors.

The committee urges the government to examine how Section 19 of the Income Tax Act contributes to the media industry’s decline and what can be done to improve the situation for all Canadian businesses.

News Media Canada president and CEO John Hinds is quoted often in the recommendations. You can reach a full copy of the report here.