Getting your business noticed costs money, and you can deduct what you spend on it. On Form T2125, it goes on line 8521, Advertising.
What belongs here
Expenses for advertising your business, including:
- ads in Canadian newspapers
- ads on Canadian television and radio stations
- a finder's fee you paid
- digital advertising, business cards, and other promotional material directed at your market
What does not belong here
Advertising placed with a foreign broadcaster. You cannot deduct expenses for advertising directed mainly at a Canadian market when you advertise with a foreign broadcaster. There is no other line for it: the cost simply isn't deductible.
A club membership treated as sponsorship. Dues for a club whose main purpose is dining, recreation, or sporting activities aren't advertising, and they aren't deductible either. That restriction sits with line 8760, business taxes, licences, and memberships.
Ads in a periodical
Restrictions apply to the amount you can deduct for advertising in a periodical. Two things decide it: the market the ad is directed at, and how much of the issue is editorial rather than advertising.
You can deduct the whole expense if the advertising is directed at a Canadian market and the original editorial content in the issue is four-fifths or more of the issue's total non-advertising content. If the original editorial content is below that, you can deduct half the expense.
What to keep
Keep a record of all your income and expenses, with the documents behind them — sales invoices, receipts, and vouchers. For this line, that is the invoice or receipt from whoever ran the ad, showing the seller, the date, and what was bought.
Don't send them in with your return. Keep them in case the Canada Revenue Agency (CRA) asks to see them. Business records follow the same six-year retention rule as your personal documents.
Official CRA sources
Source: Canada Revenue Agency (canada.ca). Not tax advice.