Online marketing business expense (Cost of Sales)

Online marketing business incurs costs to service clients including Facebook, Google, & Instagram ad expenses.

To clarify, the marketing business provides a service to market their client’s business on the above platforms to generate new business/prospects for them.

e.g. XYZ moving comp hires the online marketing business. The online marketing business then incurs expenses via Facebook ads to market XYZ moving comp on Facebook.

I looked at guide T4002 but saw no mention of Line 8450 Other costs

Where on the tax return (T2125) have others normally input this type of expense? Line 8450 Other costs?

I believe that could be classified as Cost of Goods sold as it appears to be a direct expense. Any services like that which they use to promote their own business would be either Selling Expenses or G&A



Sorry @NiceGuy, I don’t see what all these questions have to do with Taxcycle, or even a tax return.

In the situations of the questions being posted, the expected sequence of events is that the bookkeeper would submit the bookkeeping records to the Accountant for Financial Statement preparation.
In turn, the Accountant is familiar with required treatments pursuant to the HandBook for Income Statement items etc.
Tax preparation is not attempted until the Financial Statements are prepared.
This question should be referred to “the business’s” Accountant, in the first instance, so that a proper Income Statement comes into being, and so that, in turn, could be the starting point for tax considerations.

If this business is a newbie business, the bookkeeper could educate the client that part of running a business is to comply with legal and accounting requirements, so that tax requirements etc are properly met.

8450 Other direct costs sounds appropriate.

I’m not sure what Joe’s response has to do with your question. Another case of misinterpretation and overcomplication.

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You are not sure about a reference to financial statements? Or about ITA S9?

I highliight these issues because tax reporting should not be done on a “best guess” basis, using unauthorized shortcuts that are generally not correct, as that is not what the legislation says…

And as regards"overcomplication" - if the income tax act was not complicated, it could fit on only ONE page, instead of several thousand … :grin:

Your knowledge is unparalleled - don’t let provocative comments get to you - I certainly appreciate your knowledge and accurate interpretation of the law - Klaus

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Thanks everyone for your comments.
@gaywise & @brian1 appreciate your helpful responses.

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