CRA confirms that a distributor is not required to produce goods in respect of which it pays a copyright royalty

S. 212(1)(d)(vi) exempts a copyright royalty “in respect of the production or reproduction of any … artistic work.” CRA found this exemption to be available for a Canadian subsidiary which, in connection with distributing products in Canada that had been manufactured by its U.S. parent, was required to pay to a U.S. third party a copyright royalty for the use of an artistic work that was used in connection with the manufacture and sale of the products (e.g., some sort of artistic work appearing on the product itself?) Thus, it did not matter that the Canadian subsidiary did not itself manufacture the goods that it distributed.

Neal Armstrong. Summary of 5 January 2018 External T.I. 2017-0697811E5 under s. 212(1)(d)(vi).