Newsgroups: can.general
Path: utzoo!lsuc!dave
From: dave@lsuc.on.ca (David Sherman)
Subject: Re: American magazines in Canada
Reply-To: dave@lsuc.UUCP (David Sherman)
Date: Fri, 23-Jun-89 06:35:51 EDT
Summary: deductibility of advertising aimed at Canadians
Message-ID: <1989Jun23.063553.8095@lsuc.on.ca>
References: <89Jun19.002358edt.11715@neat.ai.toronto.edu> <2342@uwovax.uwo.ca> <1989Jun21.200421.9494@mdivax1.uucp>
Organization: Law Society of Upper Canada, Toronto

theriaul@mdivax1.uucp (Roger Theriault) writes:
>>Is it not the case that prior to the law which put barriers up to US magazines,
>>and only Canadian magazines were favored with discounted rates at Canada Post,
>>that TIME actually produced a Canadian edition with Canadian news not found
>>in the US version.  Thus the effect of the law was actually, in th case of
>>TIME, to eliminate Canadian content?
>
>I believe that this is more related to tax writeoffs for advertising expenses
>by Canadian corporations.  Revenue Canada keeps Molsons (for example) from
>placing ads in US magazines DIRECTED AT CANADIANS or in US border TV stations
>in order to get them to advertise here in Canada, thus spending the
>tax-deducted dollars here, to (one hopes) Canadian publishers and broadcasters.

First of all, Revenue Canada merely enforces the law, which is
passed by Parliament -- in this case, sections 19 and 19.1 of the
Income Tax Act.  Yes, these provisions provide that advertising
expenses (which are of course normally deductible as business expenses)
cannot be deducted, where the advertising is placed in a foreign
publication or broadcast by a foreign broadcasting undertaking
and is directed primarily at Canadians.  So it doesn't stop the
advertising from taking place, it just forces it to be done with
after-tax dollars, making it much more expensive.

However, section 19, the one which deals with publications, was
amended at the time of passing of the Free Trade Agreement.
I don't have the text in front of me, but they essentially defined
foreign as excluding the U.S.  They might as well have repealed the
entire section.  Section 19.1, dealing with broadcasting, is still
in place.

David Sherman
Toronto
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