If you’re planning a new marketing campaign or considering hiring a marketing agency, you might be wondering whether marketing expenses are tax-deductible. The good news? They are!
The government allows businesses to deduct marketing costs spent on attracting or retaining customers. These expenses are considered ordinary, reasonable, and necessary, making them straightforward to claim as long as they are directly connected to your business. When done strategically, marketing can deliver an excellent return on investment (ROI) while also helping reduce your taxable income.
Below, we’ll outline what qualifies as a tax-deductible marketing expense and provide examples to help you maximize your deductions.
What Marketing Costs Can You Write Off?
The CRA outlines specific guidelines for marketing and advertising write-offs. Here are some common types of marketing expenses that qualify for deductions:
Website Expenses
Your business website is a major asset, and the expenses related to creating and maintaining it are deductible. This includes:
- Website design, development, and content creation.
- Hosting fees and regular maintenance costs.
- Fees for tools or services supporting your website operation.
- Keep a record of all payments related to your website to ensure nothing gets missed.
Marketing and Advertising Costs
Marketing and advertising are key to promoting your business, and many associated expenses qualify for deductions, such as:
- Marketing strategy and planning.
- Content creation and sales enablement.
- SEO (Search Engine Optimization) services.
- Email campaigns and newsletters.
- Branding assets like logos and graphic design.
- Paid advertising campaigns, including Google Ads and display ads.
- Note that political advertising doesn’t qualify for deductions.
Retainers for Marketing Consultants or Agencies
Hiring a marketing consultant or agency to run your campaigns is another tax-deductible expense. Whether it’s planning your strategy, creating content, or managing campaigns, these costs can be written off.
Social Media Marketing
If social media plays a role in your marketing efforts, the associated costs are deductible. Examples include:
- Paying agencies, freelancers, or consultants to manage your social accounts.
- Subscriptions to premium platforms like LinkedIn Pro.
- Advertisements or boosted posts on platforms like Instagram, Facebook, or LinkedIn.
- Influencer marketing (subject to proper documentation, such as 1099 forms for payments).
Software and Technology Tools
Investments in marketing software and tools are also deductible. This includes subscriptions for:
- CRM platforms (e.g., HubSpot).
- Social media scheduling tools (e.g., Hootsuite).
- Email marketing software (e.g., Mailchimp).
- SEO and analytics tools (e.g., Semrush).
- Track these subscription costs to lower your taxable income.
Marketing vs. Selling Expenses
Both marketing and selling expenses are deductible but are classified differently on your tax return. For instance:
- Website costs for advertising purposes can be deducted as advertising expenses.
- E-commerce-related website expenses fall under selling expenses.
- Campaign advertising on vehicles is deductible, but operational driving costs are not.
- Temporary signage qualifies as advertising, but durable signs (lasting over a year) are depreciated as long-term assets.
- It’s essential to understand what qualifies as marketing versus selling, as each has different tax implications.
Non-Deductible Marketing Costs
Not all business-related expenses qualify for deductions. Here are some examples of non-deductible costs:
- Personal expenses or hobbies, even if they bring some promotional benefit.
- Wedding or personal event costs with a mix of clients and personal guests.
- The operational costs of driving a car with branded advertising.
- Ads for political campaigns or parties.
- Charitable donations, while potentially deductible elsewhere, don’t count as marketing expenses.
Want to fine-tune your marketing budget strategy? Reach out to us today and let’s craft a powerful marketing strategy tailored to your business goals!
Vadim Kotin
@kotin_digital
