Please note that the following document, although believed to be correct at the time of issue, may not represent the current position of the CRA.
Prenez note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle de l'ARC.
Please note that the following document, although believed to be correct at the time of issue, may not represent the current position of the CCRA.
Prenez note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle de l'ADRC.
Principal Issues: Whether the exception in subparagraph 212(1)(d)(vi) of the Act applies to a payment by a resident of Canada bar owner to a non-resident for video display material, that arrives at the bar by satellite transmission, DVD, video-cassette or through the internet, and that are digitally reproduced on video screens at the bar?
Position: No
Reasons: The payment is not in respect of the "production" or "reproduction" of a literary, dramatic, musical or artistic work, as required by subparagraph 212(1)(d)(vi), and there is a distinction between a copyright to produce or reproduce a work and a copyright to communicate a work to the public by telecommunication.
XXXXXXXXXX 2003-001897
Gilles L. Gosselin
Attention: XXXXXXXXXX
June 13, 2003
Dear XXXXXXXXXX:
Re: Royalty Payment to Non-Resident and Copyright
We are writing in response to your recent telephone conversations with Sophie Chatel (Chatel/XXXXXXXXXX) and your email dated May 9, 2003 wherein you ask us whether the exception in subparagraph 212(1)(d)(vi) of the Income Tax Act (Canada)(the Act) applies to a payment by a resident of Canada to a non-resident in the following fact scenario, which is reproduced from your email:
Bars pay fees to display literary, artistic or dramatic works. These could arrive at the bar by satellite transmission, DVD, video-cassette or through the internet. The bars pay an amount for the right to show the materials, plus an additional amount per screen at the establishment.
In our view either the preamble of paragraph 212(1)(d) of the Act applies to the payment because it is a royalty or similar payment, or subparagraph 212(1)(d)(i) applies to the payment because it is for the right to use property in Canada. However, the exception in subparagraph 212(1)(d)(vi) of the Act does not apply to the payment because the provision requires the "production" or "reproduction" of a literary, dramatic, musical or artistic work and no such "production" or "reproduction" exists.
In order for "production" to exist, as it relates to "copyright" in the Copyright Act (Canada), there must be a "creation" or "bringing into existence" (i.e., a producer takes the text of an existing play and stages a "production" of that play), neither of which are present in the fact scenario. Also, in order for "reproduction" to exist, there must be the making of tangible or intangible copies of the work (i.e., a person takes a movie film and makes a copy of that movie on a videotape), which is not present in the fact scenario.
Furthermore, there is a clear distinction between a copyright to produce or reproduce a work and a copyright to communicate a work to the public by telecommunication. The exception in subparagraph 212(1)(d)(vi) does not apply to the latter and in our view the copyright to reproduce material on video screens in a bar is a copyright to communicate a work to the public by telecommunication.
Our comments are provided in accordance with the practice outlined in Information Circular 70-6R5. We trust that they are of assistance.
Yours truly,
Jane Stalker
Section Manager
for Division Director
International and Trusts Division
Income Tax Rulings and Interpretations Directorate
Policy and Legislation Branch
- 3 -
All rights reserved. Permission is granted to electronically copy and to print in hard copy for internal use only. No part of this information may be reproduced, modified, transmitted or redistributed in any form or by any means, electronic, mechanical, photocopying, recording or otherwise, or stored in a retrieval system for any purpose other than noted above (including sales), without prior written permission of Canada Revenue Agency, Ottawa, Ontario K1A 0L5
© Her Majesty the Queen in Right of Canada, 2003
Tous droits réservés. Il est permis de copier sous forme électronique ou d'imprimer pour un usage interne seulement. Toutefois, il est interdit de reproduire, de modifier, de transmettre ou de redistributer de l'information, sous quelque forme ou par quelque moyen que ce soit, de facon électronique, méchanique, photocopies ou autre, ou par stockage dans des systèmes d'extraction ou pour tout usage autre que ceux susmentionnés (incluant pour fin commerciale), sans l'autorisation écrite préalable de l'Agence du revenu du Canada, Ottawa, Ontario K1A 0L5.
© Sa Majesté la Reine du Chef du Canada, 2003
Email this Content