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.
ISSUE:
Whether payments to a U.S. resident for a live telecast of a sporting event is subject to Part XIII tax and, if so, is the rate reduced or eliminated pursuant to either Canada-U.S. Income Tax Convention.
Problem:
A sporting event is transmitted live (without any delay) to a Canadian broadcaster who immediately broadcasts the signal to Canadian viewers. Is the payment therefor for the right to use or the right of ownership, i.e., are the payments subject to paragraph 212(1)(d)(i)? If so, is the rate of tax abated or eliminated pursuant to either Treaty?
Position:
Payments to a non-resident for the use of a signal carrying a live telecast of a sporting event are subject to Part XIII tax that is reduced by Article XI of the 1942 Treaty to 15% (There is no copyright in live signals of such events in Canada). However, as such amounts do not fall within the scope of Article XII of the 1980 Treaty, they are exempt from tax in Canada in the relevant years if they are business profits to the non-resident and the non-resident does not have a permanent establishment in Canada.
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© Sa Majesté la Reine du Chef du Canada, 1986
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