I've been looking into Canadian tax law lately, specifically, what deductions are available for an online business. One thing that concerns me is the deductions for advertising your business: it seems that you can only deduct advertising if it's with a Canadian publisher. From http://sbinfocanada.about.com/cs/taxinfo/a/maxtax2_4.htm : (their emphasis) From http://www.cra-arc.gc.ca/E/pub/tg/rc4070/rc4070-07-e.html (scroll down to "Advertising expenses"): Please, someone tell me that I'm wrong, and that somewhere it says that online advertising is always deductable. If it isn't, it would mean that if you paid $50,000 for PPC advertising, and made $50,000 from affiliate sales / adsense / YPN / etc, your $50,000 PPC advertising isn't deductable, so legally you owe tax on $50,000 of income. Does anyone have information to the contrary?
Try the business section at redflagdeals.com; seems to be some knowledgeable canadian tax folks there. I don't have an answer, though I did speak with rev canada this year about a related advertising issue out of country and their rules are a bit odd.