Nonprofits have long embraced digital advertising to raise awareness, engage supporters, and drive donations. However, starting in October 2024, organizations running Google Ads in Canada face a new cost: the Digital Services Tax (DST) surcharge. This new fee will apply to nonprofits delivering Google Ads to users in Canada. An important aspect of this new DST surcharge is that it also applies to nonprofits that are based outside of Canada.
If your nonprofit relies on Google Ads to reach Canadian audiences, no matter where your nonprofit is registered, here’s what you need to know about the DST surcharge and how it will impact your advertising budget.
What Is the Digital Services Tax (DST) Surcharge?
The DST surcharge is a new fee on your Google Ads invoice applied to all ads delivered in Canada starting in October 2024. This fee is in response to the Digital Services Tax Act introduced by the Canadian government to ensure that large tech companies, such as Google and Meta, contribute fairly to the economy by taxing revenue generated from Canadian users. To offset this new tax, Google is passing the cost to advertisers.
For nonprofits running ads in Canada, this means an additional 2.5% surcharge will be applied to ad spend. Even though the fee is relatively small, it’s important to plan for this new cost when managing your advertising campaigns.
While the new fee isn’t ideal, Google Ads media spend is still exempt from GST/HST charges, as long as you can provide your GST/HST number under the billing settings in your Google Ads account.
How Does the DST Affect Your Ad Spend?
Let’s say your nonprofit has a $3,000 budget for Google Ads targeting Canadian audiences. With the DST surcharge, you will pay $3,075 instead of $3,000. Though the difference might seem minor, over time and with larger campaigns, these costs can add up.
Nonprofits have two options to manage this change:
- Incorporating the DST surcharge into your existing budget. This option means that part of your budget will cover the extra fee, leaving slightly less for actual ad spend. For instance, out of your $3,000 budget, some will go toward paying the fee, so you’ll be spending a bit less on clicks or impressions. You will have to run some calculations in advance to determine the approximate 2.5% surcharge amount to include in your existing budget.
- Paying the DST surcharge on top of your budget. Alternatively, you can choose to maintain your full budget for ads, with the fee as an additional cost. This means your nonprofit will be charged 2.5% more than originally planned, but your advertising impact remains the same.
For nonprofits with tight budgets, deciding between these two options requires careful consideration of your overall campaign goals.
Does the DST Surcharge affect Google Ads Grant accounts?
The DST Surcharge will not impact Google Ads Grant accounts. Since these accounts are not billed, there is no surcharge applied and non profits will still benefit from the full USD$10,000/month grant available to eligible nonprofits.
Planning for Multi-Country Campaigns
For nonprofits running global campaigns or targeting multiple countries, the DST surcharge applies only to ads delivered within Canada. If you’re running campaigns across multiple regions, it’s a good idea to monitor how much of your budget is allocated to ads shown in Canada to account for the new fee.
A practical solution for nonprofits with strict budgets is to segment your campaigns by country. This allows for greater control and ensures the fee doesn’t unexpectedly impact your spending on other regions.
Why Nonprofits Should Care About This Change
For nonprofits, every dollar counts. The DST surcharge adds a layer of complexity to managing advertising budgets, especially if your organization is already navigating limited resources.
To minimize disruption, it’s essential to review your digital advertising strategy and consider how this new surcharge might influence your future campaigns. Understanding and planning for these extra costs can help ensure your organization continues to meet its marketing goals without overspending.
Staying Ahead of the Change
While the DST surcharge introduces new considerations for nonprofits running ads in Canada, it’s not a reason to shy away from digital advertising. Digital marketing remains one of the most cost-effective ways for nonprofits to connect with their communities, raise awareness for their causes, and drive donations.
By working closely with your advertising partners or agencies, you can make sure your nonprofit is prepared for the DST surcharge without sacrificing the effectiveness of your campaigns. Whether it’s adjusting budgets or rethinking your approach to multi-country campaigns, proactive planning is key.
Final Thoughts
As digital advertising continues to evolve, so do the regulations surrounding it. The Digital Services Tax is one such change, but it’s manageable with the right preparation. For nonprofits committed to digital marketing, understanding how the DST surcharge impacts your advertising budget is the first step toward navigating this new landscape and ensuring that your campaigns remain efficient and effective.
If your nonprofit runs ads in Canada or is considering it, now is the time to start factoring the DST surcharge into your plans. With proper budgeting and a clear understanding of these changes, your organization can continue driving impact through digital marketing.
