Starting October 1st, 2024, Google will implement a 2.5% fee on ads served in Canada, resulting from the new Canadian Digital Services Tax (DST) legislation. This tax is part of Google’s efforts to comply with local taxation requirements for digital services. As a business advertising in Canada, it is important to understand how this change impacts your ad spend and how to track the new charges on your invoices.

What is the Digital Services Tax?

Canada’s Digital Services Tax, aims to tax multinational digital companies for revenues generated within Canadian borders. With the rise of digital advertising and other services, Canada follows in the footsteps of other countries introducing similar taxes to ensure that companies generating significant revenue from Canadian consumers contribute to local economies.

Google’s response to this legislation is to pass on the 2.5% tax to advertisers for any ad impressions or clicks that are served within the Canadian jurisdiction. This fee will be visible as an additional line item in your invoices and applied to both Google Search and Display ads. Notably, this 2.5% charge will also be subject to applicable provincial sales taxes, increasing the overall cost of advertising in Canada.

How Does the Additional 2.5% Charge Work?

The new tax is calculated based on the number of impressions or clicks your ads receive in Canada. This means that regardless of whether your ad campaigns target a global audience, if any of those impressions occur in Canada, the DST charge will be applied. Here’s how you can find the charge:

  • If you handle your billing directly, the new tax will appear in your Google Ads monthly invoices or statements.
  • You can also view the charges in the transactions section of your Google Ads account.

For advertisers, it’s crucial to factor this additional cost into your budget planning, especially for those running significant portions of their campaigns within Canada. For businesses with smaller margins, the increase may seem minimal, but for larger advertisers, this new cost could add up and affect the overall ROI of your digital campaigns.

Managing Your Google Ads Budget with the DST

With the introduction of this 2.5% tax, businesses need to be proactive in assessing how the new charge may impact their digital marketing strategies. Here are some key steps to ensure you’re prepared:

  • Review Your Invoices: Make sure to closely review your upcoming Google Ads invoices to identify how the DST charge is being applied. This will give you a clear idea of how much extra you’ll be paying.
  • Adjust Your Budget: Since this charge will affect ad spend, consider adjusting your Google Ads budget or reallocating funds between different campaigns, especially if you have a high volume of impressions in Canada.
  • Optimize Campaign Targeting: Evaluate if adjusting your targeting settings could help mitigate some of the costs. For example, if you’re not specifically targeting Canadian audiences but receive a significant portion of impressions from there, consider refining your location targeting.
  • Consult Your Account Lead: If you have concerns about the new charges or how they’re impacting your campaigns, be sure to reach out to your account lead for guidance. They can help you navigate this transition smoothly and provide insights on potential budget adjustments.

Where to Find More Information

For more in-depth information about how Google calculates and applies the Digital Services Tax, you can visit Google’s official support page here.
This page provides a detailed breakdown of the tax’s application and can help answer any specific questions you may have about how the additional costs are calculated based on your ad impressions and clicks.

The Goose Digital Advantage

As a digital marketing agency deeply integrated with leading platforms like Google Ads, Goose Digital is committed to helping our clients stay ahead of changes that impact their marketing investments. Whether it’s adjusting campaign budgets, optimizing ad spend, or navigating new taxation laws, we provide the expertise and strategic insight to ensure your digital marketing remains effective and profitable.

If you’re concerned about how the Digital Services Tax may impact your ad campaigns, contact Goose Digital today to discuss your marketing strategy or get a free assessment of your marketing needs.