As of October 1, 2024, a new 2.5% tax applies to all advertising spend through Google Ads and DV360 in Canada. This measure directly affects all businesses that use Google as an acquisition lever, increasing the effective cost of campaigns running in Canada.
At Bofu Marketing Agency , our role is to anticipate these changes and optimize your investments so that every dollar continues to generate maximum value.
A tax resulting from new Canadian legislation
This measure stems from the Digital Services Tax Act , adopted in July 2024 by the federal government. It aims to ensure a fair contribution from large technology companies that generate significant revenue in Canada, even if they are not necessarily based there. Initially set at 3% on revenue generated by Canadian users, this legislation targets giants such as Google, Meta, Amazon, and Apple.
Google responded by passing this tax on to its customers. Since October, a 2.5% tax has been automatically added to all ad impressions served in Canada, regardless of the advertiser's geographic location.
Official sources:
• Google Ads Support – Applicable Taxes
• DV360 Support – Digital Service Taxes
What this means in concrete terms for your business
This cost increase applies without any direct correlation to your campaign performance . In other words, your results remain the same, but your bills increase. For example, a business that spends $10,000 per month on Google advertising will now have to pay about $250 more each month—or $3,000 per year—just because of this tax.
Even if this amount seems minor in a growth context, it has a direct impact on your profit margins and your ROAS (Return on Ad Spend) .
Another important point: this tax is not a traditional GST or QST. It is an additional fee imposed by Google , which generally cannot be recovered by businesses. It is therefore essential to include it in your budget projections as a net expense.
Foreign companies also concerned
The tax applies to all ads served in Canada , even if the business is located outside the country. Therefore, a French, American, or Mexican business targeting Canadian consumers through Google Ads will also be subject to this tax.
How to adapt to this new reality
In a context where margins are tightening and every dollar counts, it is crucial to rigorously review your media strategies. Here are some concrete courses of action:
1. Re-evaluate your advertising budgets
Factor this tax into your monthly and annual projections to avoid end-of-period variances. If you manage multiple channels, adjust your allocations to maintain the overall effectiveness of your campaigns.
2. Optimize your existing campaigns
Refine your campaign structures, audiences, keywords, and bidding strategies. The goal: generate more results with every dollar invested. This tax emphasizes the importance of precise, profitability-driven management.
3. Diversify your acquisition channels
Don't rely solely on Google Ads. Explore other platforms like Meta Ads, LinkedIn, TikTok, Pinterest, or even programmatic placements tailored to your audience. A well-balanced omnichannel strategy can reduce the pressure on any one lever.
Our role: to maximize your performance despite new constraints
At Bofu , we help our clients turn challenges like these into strategic opportunities. Our approach is based on continuous optimization , an omnichannel vision , and a clear understanding of your data to make the right decisions at the right time.
Do you want to assess the real impact of this tax on your campaigns or identify levers to adjust to offset this increase? Let's talk. Our media team is ready to adapt your strategy to continue generating returns in this new tax environment.
Contact us to schedule a meeting with an expert.
