Canada’s proposed tax break on digital subscriptions

Canadian government supports news media transition


Canada’s Finance Minister announced C$ 595 million (about Rs. 3,184 crores) in tax incentives in November 2018 aimed at helping Canadian news publishers’ offset labour costs associated with reporting, in addition to tax credits for people who subscribe to digital news services.

In the latter initiative, tax payers would receive a non-refundable deduction of 15% for their digital subscriptions. Details of the proposals are still being defined.

The tax credit is one of three aspects of a C$ 595-million initiative with the objective of a five-year boost for the ailing media industry promised by finance minister Bill Morneau in November 2018 fall fiscal update, according to CBC News. The tax credit will be worth 15% of the cost of a subscription, although Finance Canada spokesman Jack Aubry says the actual dollar amount someone saves will depends on the cost of a subscription.

According to Aubry the government believes the tax credit is needed to encourage more Canadians to subscribe to online news and help media organizations transition to a more sustainable business model.

Several countries, including the USA, the UK and Australia, for example, either do offer, or have offered, tax payers deductions for subscriptions of periodicals that directly relate to their work – such as for professional journals, and sometimes even newspapers if they are intended for use at a business.

Canada’s proposals appear to be the first of their kind, reports WAN-IFRA. However, there is already some debate in Canada over whether government intervention is necessary or even a good idea. David Skok, the CEO and editor in chief of The Logic, is critical of the government’s plans. John Hinds, president and CEO of News Media Canada, the national association of the Canadian news industry, told WAN-IFRA that he welcomes the plan.

“We believe that it will be a valuable tool to encourage people to subscribe to publications. As you know, it is hard to get people to pay for our products. We also believe it will be a good marketing tool,” said Hinds. “The subscription tax credit also fits in with the other measures the government has announced,” he added.

“They have expanded the charitable status definition to allow news media to set up charitable foundations to receive donations. . . . The big item in the announcement and the substantial investment is the journalism tax credit. This will allow publications to deduct a percentage of eligible journalism costs,” — John Hinds.

The Covid-19 pandemic led to the country-wide lockdown on 25 March 2020. It will be two years tomorrow as I write this. What have we learned in this time? Maybe the meaning of resilience since small companies like us have had to rely on our resources and the forbearance of our employees as we have struggled to produce our trade platforms.

The print and packaging industries have been fortunate, although the commercial printing industry is still to recover. We have learned more about the digital transformation that affects commercial printing and packaging. Ultimately digital will help print grow in a country where we are still far behind in our paper and print consumption and where digital is a leapfrog technology that will only increase the demand for print in the foreseeable future.

Web analytics show that we now have readership in North America and Europe amongst the 90 countries where our five platforms reach. Our traffic which more than doubled in 2020, has at times gone up by another 50% in 2021. And advertising which had fallen to pieces in 2020 and 2021, has started its return since January 2022.

As the economy approaches real growth with unevenness and shortages a given, we are looking forward to the PrintPack India exhibition in Greater Noida. We are again appointed to produce the Show Daily on all five days of the show from 26 to 30 May 2022.

It is the right time to support our high-impact reporting and authoritative and technical information with some of the best correspondents in the industry. Readers can power Indian Printer and Publisher’s balanced industry journalism and help sustain us by subscribing.

– Naresh Khanna

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