Writing Off Business Website Expenses In Canada
As someone who has been in the field of website design and marketing for over 15 years, one thing that still shocks me is the number of Canadian business owners don’t know they can write off marketing and website expenses. The reality is that most business owners in Canada overlook this valuable tax write off which offers you a win/win bargain. If your website or marketing material is used for business purposes, which of course it is, than it’s considered a legitimate expense by the Canada Revenue Agency (CRA).
This is an incredible opportunity that all Canadian business owners should be taking advantage of.Whether you’re launching a brand-new site or upgrading an existing one, your web design, hosting, and even digital marketing expenses like Google ads can often be written off as business costs. Ignoring these deductions for your Canadian company means leaving significant money on the table. And in this economy, we know that is bad for business.
This is why, in this guide, we’ll break down how to save money while making money. By properly classifying and claiming your website expenses, you can ensure your business maximizes the tax benefits while staying compliant with CRA regulations.
If you’re running a business in Canada, your online presence isn’t just an asset,it’s an investment, and the tax system recognizes that. Let’s get into what you need to know.
What Is A Tax Write Off
A tax write off, also known as a business deduction, is an expense that a Canadian business can subtract from its total revenue to reduce the amount of taxable income. In Canada, the Canada Revenue Agency (CRA) allows businesses to deduct legitimate operating costs that are necessary for running and maintaining the business. By claiming these deductions, businesses can lower their overall tax bill, keeping more money in their pockets while staying compliant with tax regulations.
For Canadian businesses, tax a write off covers a broad range of expenses, including rent, utilities, office supplies, employee wages, advertising, and yes, website expenses and digital marketing. The key is ensuring that the expense is directly related to earning business income. While some purchases, like office supplies, are fully deductible in the same tax year, larger investments, such as a custom-built website, may need to be depreciated over time as a capital cost.
Understanding how these deductions work ensures you’re not overpaying on taxes and helps you reinvest more into your Canadian business.
How Does It Benefit Canadian Businesses
Writing off business expenses, including marketing and website expenses, provides Canadian businesses with significant financial advantages. First and foremost, it reduces taxable income, which directly lowers the amount of tax owed to the Canada Revenue Agency (CRA). By deducting these necessary expenses, businesses keep more of their earnings, freeing up capital for growth, reinvestment, or operational improvements.
Instead of paying more in taxes, businesses in Canada can allocate those funds toward better marketing, improved services, or expanding their online presence with an awesome website from us.
Additionally, a tax write off improves cash flow, which is crucial for all Canadian businesses. Many businesses in Canada operate on tight margins, and the ability to offset costs through a write off can make a real difference in financial stability. For businesses investing in websites and digital marketing, these write-offs encourage long-term growth by allowing them to improve their online visibility without taking a major financial hit.
Simply put, leveraging tax write offs properly helps businesses in Canada remain competitive, financially healthy, and positioned for success.
What Website Expenses Can Be Written Off
Canadian businesses can write off a wide range of website expenses, as long as they are directly tied to operating the business. These costs generally fall into two categories: operating expenses and capital expenses. Understanding how each applies ensures you maximize your tax deductions while staying compliant with the Canada Revenue Agency (CRA).
1. Website Design and Development
If you’ve paid for a custom website, the cost may be considered a capital expense, meaning it must be depreciated over time rather than deducted in full in the same year. However, if you regularly update or maintain your website with new features, those costs can often be classified as operating expenses, which are fully deductible. For example, if you hire a developer to build a new website for $5,000, it may be written off over several years. But if you pay $500 for a redesign or new landing page, that cost is usually deductible in the same year.
2. Web Hosting and Domain Registration
Your website needs a home on the internet, and hosting fees are considered an essential business expense. Monthly or annual hosting fees, whether through providers like Bluehost, SiteGround, or WP Engine, can be deducted in full as an operating expense. Similarly, domain registration and renewal fees qualify as write-offs since they are necessary for maintaining your business’s online presence.
3. Website Maintenance and Software Subscriptions
Ongoing website maintenance, such as security updates, plugin subscriptions, and performance optimization, can all be written off. If you pay for premium WordPress themes, website backup services, or SEO tools like RankMath Pro, those are deductible operating costs. Additionally, software subscriptions used to manage your website, like Shopify for e-commerce businesses or Adobe Creative Cloud for content creation,can also be written off.
4. Digital Marketing and Advertising
A website without traffic doesn’t do much for business, which is why marketing expenses related to your site are fully deductible. This includes Google Ads, Facebook Ads, SEO services, and email marketing tools like Mailchimp or Klaviyo. If you hire an agency or freelancer to manage your digital marketing campaigns, those fees are also deductible. For example, if you spend $2,000 per month on Google Ads, that entire amount can be written off as a business expense.
5. E-Commerce and Payment Processing Fees
For businesses running an online store, e-commerce platform fees and payment processing charges are also tax-deductible. If you use Shopify, WooCommerce, or BigCommerce, the monthly subscription cost is fully deductible. Additionally, payment processing fees from providers like Stripe, PayPal, or Square can also be written off, reducing the overall financial burden of running an online business.
By properly tracking and categorizing these expenses, businesses can take full advantage of available tax deductions. Every dollar written off reduces taxable income, allowing businesses to reinvest in growth while staying financially efficient.
What Other Marketing Expenses Can Be Written Off?
Any marketing related expenses are tax-deductible for Canadian businesses. As long as the expense is directly related to generating business income, it can typically be written off. Here’s a breakdown of common marketing expenses that qualify:
1. Pay-Per-Click (PPC) Advertising
Any money spent on digital advertising platforms like Google Ads, Facebook Ads, LinkedIn Ads, or YouTube Ads is fully deductible. Whether you’re running search campaigns, display ads, or retargeting, these costs are considered essential business expenses. If you pay an agency or freelancer to manage your PPC campaigns, their fees are also deductible.
2. Search Engine Optimization (SEO) Services
SEO expenses, including hiring an SEO expert, paying for keyword research tools, or investing in link-building services, can be deducted as operating expenses. If you pay for SEO tools like Ahrefs, SEMrush, or Moz, those subscription costs also qualify.
3. Customer Relationship Management (CRM) Software
Subscriptions to CRM platforms like HubSpot, Salesforce, Zoho, or Pipedrive can be written off since they help businesses manage client relationships and sales. These tools are considered necessary for business operations and marketing efforts.
4. Branding and Graphic Design (Logos, Business Cards, and More)
Branding expenses such as logo design, business cards, brochures, flyers, and other marketing materials are fully deductible. If you hire a graphic designer to create social media graphics, website assets, or promotional materials, those costs can also be written off.
5. Social Media Management and Content Creation
If you hire a social media manager or pay for social media scheduling tools like Hootsuite, Buffer, or Later, those expenses qualify. Additionally, costs related to content creation such as blog writing, video production, or professional photography are also deductible. If you pay for stock photos or video licensing, those expenses can be claimed as well.
6. Email Marketing and Automation Tools
Subscription fees for platforms like Mailchimp, Klaviyo, ConvertKit, or ActiveCampaign can be written off. Any costs related to email list-building, including lead generation tools and landing page builders, are also deductible.
7. Sponsorships and Promotional Events
If you sponsor a local event, sports team, or community initiative as part of your marketing strategy, those sponsorship expenses may be deductible. The same applies to costs associated with attending or hosting networking events, trade shows, or industry conferences for business promotion.
8. Influencer and Affiliate Marketing
Payments made to influencers, brand ambassadors, or affiliate marketers who promote your business can also be written off. These costs fall under advertising and promotional expenses.
9. Traditional Advertising (Radio, TV, Print, and Billboards)
If your business invests in print ads, direct mail campaigns, radio spots, television commercials, or billboard advertising, those costs are fully deductible.
10. Public Relations (PR) and Press Releases
If you hire a PR agency to handle media outreach, reputation management, or press releases, those costs are considered a business expense and can be deducted.
11. Website Analytics and Tracking Tools
Any software or tools used to track marketing performance, such as Google Analytics 360, Hotjar, or Crazy Egg, can be written off. These tools help businesses measure their online efforts and adjust strategies accordingly.
By tracking all marketing-related expenses, businesses can significantly reduce their taxable income and reinvest in further growth. Proper bookkeeping ensures you claim every deduction possible while staying compliant with the CRA.
How to Write Off Website and Marketing Expenses in Canada (With Examples)
Writing off business expenses in Canada involves properly categorizing costs, maintaining documentation, and correctly reporting them on your tax return. The Canada Revenue Agency (CRA) allows businesses to deduct reasonable expenses necessary for earning income, but different types of expenses have different tax treatments. Below is a step-by-step breakdown of how to write off website and marketing expenses with real-world examples.
1. Categorizing Website & Marketing Expenses
The first step is determining whether the expense is an operating expense (fully deductible in the same tax year) or a capital expense (deducted over time through depreciation).
Operating Expenses (Fully Deductible in the Same Year)
Operating expenses are ongoing costs required to run your business. These are fully deductible in the year they are incurred.
Examples:
- Web hosting fees ($200/year for Bluehost)
- Domain registration and renewals ($25/year for a .com domain)
- SEO software subscriptions ($150/month for Ahrefs)
- Google Ads or Facebook Ads ($5,000 spent on paid ads)
- CRM software ($100/month for HubSpot)
- Email marketing tools ($75/month for Mailchimp)
- Logo design ($500 for a new business logo)
- Business cards and promotional materials ($300 for flyers and cards)
Capital Expenses (Depreciated Over Time)
Capital expenses are one-time costs for assets that provide long-term value. Websites that are custom-built or have a significant development cost often fall into this category. Instead of writing them off in one year, they are depreciated over several years using the Capital Cost Allowance (CCA) system.
Examples:
- A brand-new custom-built website ($8,000 from a web developer)
- A major website redesign ($4,000 for a new site structure and features)
- High-end video production for a marketing campaign ($10,000 for a commercial)
These expenses typically fall under Class 50 (55% CCA rate) for software-related expenses, meaning you can deduct 55% of the remaining balance each year.
2. Keeping Proper Documentation
To claim expenses, you need to keep detailed records for at least six years in case of a CRA audit.
What to Keep:
- Invoices & Receipts: Keep all receipts from service providers (e.g., Google Ads, Bluehost, graphic designers).
- Bank & Credit Card Statements: Ensure transactions match your records.
- Contracts & Agreements: If you hire a web designer, maintain a signed contract.
- Advertising Reports: Screenshots of ad spending in Google Ads or Facebook Ads.
- Expense Tracking Spreadsheets: Organize expenses by category for easy reporting.
Example: If you spend $2,000/month on Facebook Ads, save copies of invoices, payment confirmations, and ad performance reports to justify the deduction.
3. Claiming Expenses on Your Tax Return
Once you’ve categorized and documented your expenses, you can claim them when filing your business taxes.
For Sole Proprietors & Self-Employed Individuals
If you operate as a sole proprietor or freelancer, you report expenses on your T2125 – Statement of Business or Professional Activities form when filing your personal tax return.
Example:
If you earned $100,000 in revenue and had $15,000 in marketing expenses (Google Ads, website costs, SEO services), you report:
- Revenue: $100,000
- Advertising Expenses (Line 8521): $10,000 (Google Ads, Facebook Ads, SEO)
- Office Expenses (Line 8810): $2,500 (CRM software, email marketing)
- Software & Website (Line 9220 or Class 50 CCA): $2,500 (Web development, hosting)
- Net Taxable Income: $85,000 (after deductions)
This means you only pay tax on $85,000 instead of $100,000, reducing your tax bill significantly.
For Incorporated Businesses (Corporations)
If you run a corporation, expenses are deducted on your T2 Corporate Tax Return under the appropriate categories:
- Advertising and Promotion (Line 8521) – Covers digital ads, SEO, social media marketing, influencer partnerships.
- Office Expenses (Line 8810) – Covers software subscriptions like CRM and email marketing tools.
- Computer Software & Websites (Class 50 CCA, Line 9936) – Covers web development costs.
Example:
A corporation earns $500,000 in revenue and spends $50,000 on marketing and website-related costs. After deducting these, the business is taxed only on $450,000, reducing its corporate tax liability.
4. Handling GST/HST on Marketing & Website Expenses
Most digital marketing and website services charge GST/HST, which means businesses registered for GST/HST can claim an Input Tax Credit (ITC) to recover these amounts.
Example:
If you pay $10,000 for Google Ads and are charged 5% GST ($500), you can claim the $500 GST as an ITC when filing your GST/HST return.
5. Splitting Personal vs. Business Use
If you use a website or digital marketing tools partially for personal use, you can only write off the business portion.
Example:
- A freelancer runs a blog for business and personal content. If 70% of the website is for business, they can only deduct 70% of related expenses.
- A small business owner uses Canva for both personal and work designs. If 80% of use is for business, only 80% of the Canva subscription is deductible.
Mistakes to Avoid When Writing Off Website and Marketing Expenses in Canada
While writing off website and marketing expenses can save you thousands in taxes, mistakes can lead to missed deductions, audits, or penalties from the CRA. Here are the most common errors to avoid:
1. Claiming Personal Expenses as Business Expenses
The CRA requires that expenses be directly related to business operations. Claiming personal costs as business deductions can trigger audits and penalties.
Example of a Correct Deduction:
- A website for your business that generates leads, sales, or client inquiries.
Example of an Incorrect Deduction:
- A personal blog or hobby website with no business purpose.
How to Avoid:
- If you use an expense for both personal and business purposes (e.g., website, software, or advertising), only deduct the business portion.
2. Misclassifying Capital Expenses as Operating Expenses
Not all website-related costs can be deducted in full the same year. Major website development or redesign projects are capital expenses, meaning they must be depreciated over time.
Correct:
- A $10,000 custom website is claimed under Class 50 (55% CCA rate) and deducted over several years.
Incorrect:
- Writing off the entire $10,000 website as an operating expense in one year.
How to Avoid:
- Use CRA’s Capital Cost Allowance (CCA) rules to determine if an expense should be depreciated.
3. Forgetting to Collect and Keep Receipts
Without proper documentation, the CRA can deny deductions during an audit.
Correct:
- Keep all invoices, receipts, and contracts for advertising, web design, SEO, and software expenses for at least six years.
Incorrect:
- Relying on credit card statements alone without itemized receipts.
How to Avoid:
- Store receipts digitally in Google Drive, Dropbox, or accounting software.
- Use accounting tools like QuickBooks, FreshBooks, or Wave to track expenses.
4. Ignoring GST/HST Input Tax Credits
If your business is GST/HST registered, you can recover the sales tax paid on eligible expenses as Input Tax Credits (ITCs).
Correct:
- Claiming back the 5% GST ($500) from a $10,000 Google Ads expense.
Incorrect:
- Forgetting to track GST/HST paid on digital marketing services and losing out on potential tax savings.
How to Avoid:
- Keep detailed invoices that show GST/HST amounts.
- File GST/HST returns accurately and claim ITCs.
5. Overlooking Small Marketing Expenses
Many businesses forget to write off smaller marketing costs that add up over time.
Common Deductible Expenses Many Miss:
- Stock photos, fonts, and video editing software
- Web security tools (SSL certificates, firewall protection)
- Paid online directories (Yellow Pages, industry listings)
- Influencer payments or affiliate marketing costs
- Business social media scheduling tools (Hootsuite, Buffer)
How to Avoid:
- Review bank statements and PayPal transactions to ensure you claim all deductions.
6. Not Tracking Employee or Contractor Payments
If you hire freelancers, marketers, or web designers, those payments must be properly documented.
Correct:
- Issuing a T4A (for contractors in Canada) or T5018 (for subcontractors in construction) for freelancers you paid more than $500.
Incorrect:
- Paying freelancers under the table and claiming it without an invoice.
How to Avoid:
- Always request invoices from contractors and track payments in bookkeeping software.
7. Failing to Claim Depreciation for Large Marketing Assets
Big investments, such as high-end video production or custom software, must be depreciated rather than fully deducted upfront.
Correct:
- A $15,000 professionally shot business video is claimed under Class 12 (100% CCA, if under $30,000) or amortized over several years.
Incorrect:
- Trying to claim the full $15,000 in one tax year when it qualifies for depreciation.
How to Avoid:
- Consult an accountant for high-value assets to ensure you claim the correct CCA category.
8. Forgetting to Deduct Software & Subscription Costs
Marketing and website-related software expenses are 100% deductible but often overlooked.
Commonly Missed Software Deductions:
- Adobe Creative Cloud (Photoshop, Illustrator, Premiere Pro)
- SEMrush, Ahrefs, or Moz (SEO tools)
- Canva, Envato Elements (Graphic design tools)
- Zapier, Calendly, or automation software
How to Avoid:
- Track all recurring software subscriptions in a monthly expense report.
9. Waiting Until Tax Season to Organize Expenses
Scrambling at the last minute can lead to missing deductions or filing errors.
Correct:
- Track expenses monthly and separate marketing costs into categories (ads, software, web hosting, etc.).
Incorrect:
- Waiting until tax season to go through a year’s worth of bank statements.
How to Avoid:
- Use accounting software like QuickBooks or Wave to categorize expenses throughout the year.
10. Not Consulting an Accountant for Complex Deductions
If you’re unsure whether an expense qualifies, getting professional advice can prevent costly mistakes.
When to Consult an Accountant:
- If you have a custom website project that may need capital expense treatment.
- If your business is scaling and spending over $50,000/year on marketing.
- If you want to maximize deductions without triggering CRA red flags.
How to Avoid:
- Work with an accountant or tax professional to ensure all claims follow CRA guidelines.
Final Thoughts
Writing off website and marketing expenses in Canada is a smart way to reduce your taxable income and keep more money in your business. From website development and hosting to PPC ads, SEO, and branding, these expenses are not just essential for growth but also fully or partially deductible under CRA guidelines. Understanding the difference between operating and capital expenses, tracking every receipt, and ensuring compliance with tax laws can help you maximize your deductions without running into issues.
However, many business owners either fail to claim all eligible expenses or make mistakes that lead to denied deductions. Misclassifying capital expenses, forgetting to track GST/HST input tax credits, and not keeping proper documentation can cost you money or even trigger an audit. By maintaining detailed records, using accounting software, and consulting a tax professional when needed, you can ensure that you take full advantage of every deduction available.
At the end of the day, tax write-offs are a powerful tool to offset business costs and improve your bottom line. Every dollar saved on taxes is a dollar that can be reinvested into better marketing, improved services, or expanding your operations. Whether you’re a small business owner or an established company, staying informed about your deductible expenses ensures you’re not leaving money on the table.
