As a trusted digital marketing partner, we are dedicated to keeping you informed about important changes that impact your advertising strategy. Starting October 1, 2024, Google will implement a new 2.5% surcharge for ads served in Canada, known as the “Canada DST Fee.”
Why Is the Canada DST Fee Being Implemented?
The Canada DST Fee is being implemented to comply with Canada’s new digital services tax legislation, which aims to ensure that digital service providers contribute fairly to the economy. This legislation reflects a growing trend worldwide to tax digital services to create a level playing field between traditional and digital businesses.
Understanding the Canada DST Fee
The Canada DST Fee will appear on your Google Ads invoices and statements as a separate line item. It will also be visible in the “Transactions” section of your Google Ads account.
Here’s what you need to know:
- Surcharge Display: The surcharge will be clearly marked on your invoices, making it easy to identify the additional cost.
- Applicable Taxes: Any applicable taxes (e.g., sales tax, VAT, GST, or QST) may also apply to this new surcharge.
- Payment Methods: The impact of this fee varies based on your payment method.
- Monthly Invoicing or Automatic Payments: If you pay through monthly invoicing or automatic payments, the surcharge will be added to your account budget. For instance, with a budget of $100, the 2.5% Canada DST Fee will result in a total bill of $102.50, excluding any applicable taxes.
- Manual Payments: For those using manual payments, the surcharge might be charged after your payment has been fully spent. This could leave an open balance that will be deducted from your next prepayment. For example, if you accumulate $2.50 in Canada DST Fee and make a new payment of $100, your available balance would be $97.50.
What Advertisers Can Do
For most advertisers, no action is required to accommodate this change. However, if you’re concerned about the impact of this fee, here’s what you can do:
- Review Your Budgets: The surcharge will increase your advertising costs slightly, which should be factored into long-term budget planning and ROI calculations.
- Adjust Payment Strategies: Ensure that your financial plans account for the 2.5% increase to avoid any unexpected charges. If you make manual payments for Google Ads, you may need to update your payment amounts to accommodate this new surcharge.
- Speak to Your Foundery Account Manager: As always, our team is here to help you navigate these changes. If you have any questions or would like to adjust your Google Ads budget, please don’t hesitate to reach out to us.
FAQs
The Canada DST Fee is part of a broader global movement where many countries, including the UK, France, and India, have introduced similar digital services taxes. These surcharges typically range from 2% to 3%, putting Canada’s 2.5% fee in line with international standards.
Currently, the Canada DST Fee applies universally to all ads served in Canada without exemptions. Advertisers of all sizes and types should plan for this surcharge.
Currently, there is no indication that the fee will be temporary. However, as tax policies evolve, there may be changes in the future. Your Foundery account manager will keep you informed of any updates.
Failing to adjust manual payments could result in an open balance on your account, potentially leading to disrupted ad campaigns or additional charges. Ensure that your payments reflect the surcharge to avoid these issues.
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