Reducing your overall tax burden and aiming to pay the lowest personal income tax rate is something that many Canadians strive to achieve. The less we pay to the government in taxes, the more money we have in our bank account that we can use to buy stocks, go to the movies, or even just tuck away for a rainy day.
When we had many of our Stocktrades Premium members ask us whether or not they would qualify for the digital news subscription tax credit here in Canada, we decided to make a post covering what the digital subscription tax credit is, what justifies a qualifying subscription expense, and whether or not you currently hold an eligible subscription.
What exactly is the digital news subscription tax credit?
The digital news subscription tax credit was made law in 2021 to support Canadian journalism and help our Canadian digital news media organizations. It is a non-refundable tax credit that an individual can claim if they subscribe to a qualified Canadian journalism organization (QCJO).
Individuals can claim qualifying subscription expenses any time after 2019, and before 2025. The goal of this law was to help our Canadian journalism organizations by encouraging individuals to stay subscribed to their platforms, giving them a potential tax refund on the subscription costs.
What is a qualifying organization, and what qualifies as a subscription expense?
Keep in mind that the conditions may have changed from the time this article was written to the time you're reading it. It is important to check the Government of Canada's website to see if a subscription you hold today still qualifies. However, it is important to note that organizations that no longer qualify for the tax credit must inform their subscribers of the change.
Overall though, the organization must be a QCJO, and it must give the individual access to news content in digital form.
A QCJO must first submit a T622 form to the Canadian government to determine whether or not their products are eligible for the tax credit. If a QCJO's product does qualify for the tax credit, it will be added to the CRA's list of eligible subscriptions, which you can click here to view.
In terms of you as a subscriber, a qualifying subscription expense is an amount you paid in the first year for a digital news subscription with a QCJO that does not hold a license in subsection 2(1) of the Broadcasting Act.
The Canada Revenue Agency says I have an eligible subscription, what exactly do I do now?
Claiming the digital subscription tax credit is a straightforward process. You simply claim them on line 31350 of your tax return.
As of 2021, according to the Canada Revenue Agency, the maximum amount you can claim is $500.
What if I split my subscription with a friend?
First off, you must figure out if this is even within the subscription's terms of service. You don't want to lose access to your subscription due to not following their terms.
According to the CRA, only the person who agrees to the subscription can claim the tax credit. However, if you and another person (a spouse, roommate etc.) can claim the same qualifying subscription expenses, you can split the claim for those digital news subscription expenses.
Just make sure that between both parties, the total amount doesn't exceed the maximum amount you can claim.
What is the maximum credit I can receive?
The Canada Revenue Agency will multiply the total costs of an individual's digital news subscription, up to a maximum of $500, by the lowest personal income tax rate possible. At the time of writing this article, that is 15%.
So, let's go over a basic example of this. Say you subscribe to a platform that has a qualifying subscription and the total cost is $20 per month. The $240 you paid over the year would be multiplied by 15% (0.15) to come to a total credit of $240(0.15) = $36.
If your qualifying subscription was $600 over the year, you would take $500, and multiply it by 15%. Because remember, the maximum allowed at the time of writing this article is $500. So, it would be $500(0.15) = $75.
So technically, the maximum credit you are allowed is $75.
Do I need to submit receipts for my subscription to the CRA?
Fortunately, you are not required to submit receipts to the CRA for your subscription. However, you must keep these receipts handy. Because although you do not have to submit them, that does not stop the government from asking you to provide them at some point in the future.
What happens if I receive non-digital content from a QCJO?
If you subscribe to a QCJO and receive both digital and non-digital content from the provider, you've got some work to do to determine how much is eligible.
If you receive both, you need to figure out how much a stand-alone digital subscription to the content would be and figure out a comparable cost. Let's lay this out in a simple example. Say you have two qualifying companies that provide the same content. One of which is an exclusively digital provider for $12 per month, while the one you subscribe to is $24 per month and provides both digital content and a monthly magazine.
According to the CRA, only the cost of a stand-alone digital subscription is considered an eligible expense, not the non-digital content portion. So in this case, because we have a similar subscription and a price point of that subscription ($12) you would use the $12 mark to calculate your credit.
However, let's say there is no similar product, and you have no basis as to what you can claim. If this is the case, only half of the amount paid is an eligible expense. So in this case, if you have a subscription that provides digital content plus a magazine for $30 per month, half of the total subscription cost, or $15 per month is what you would base your credit off of.
What are some popular eligible companies?
As mentioned earlier in this article, we provided a link to a live list of eligible companies that meet the criteria. However, we've highlighted some popular ones below. Just make sure to double-check whether or not your subscription is eligible today via the CRA's website.
- The National Post
- Calgary Herald
- The Globe and Mail
- Toronto Star
- The Guardian
- London Free Press
- Montreal Gazette
Overall, the credit is a small, but still useful
Many will shrug off the credit as it barely compensates them for their annual subscription payment. However, whether it is the digital news subscription credit, or a FPT deposit, a tax credit is a tax credit nonetheless, and if the CRA is going to give you a break and offset part of your subscription, why not take advantage?