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.
O.Laurikainen
May 7, 1992
MONTREAL D.O.- CICA CONFERENCE
Question 21(c)
As a result of the passage on June 8, 1988 of Bill C-60, An Act to Amend the Copyright Act which amended the Copyright Act to include computer programs in the definition of "literary work" and the Supreme Court of Canada decision in Apple Computer Inc. v. Mackintosh Computers Ltd. and Apple Computer Inc. v. 115778, what is Revenue Canada's position with respect to the application of paragraph 212(1)(d) of the Act and the Canada-U.S Income Tax Convention (1980) to payments made by a resident of Canada to a U.S. resident owner of a computer program in respect of the production or reproduction of the program?
Department's Position
A payment made by a resident of Canada to a non-resident owner of a computer program in respect of the production or reproduction (making of copies) of the program in Canada for distribution to other persons would generally be exempt from tax in Canada under Part XIII of Act by virtue of subparagraph 212(1)(d)(vi) of the Act. In such circumstances, it would not be necessary to review the provisions of a tax treaty since Canada has no right to tax under its domestic law. However, it is necessary to review the particular agreement(s) to determine whether a payment made pursuant thereto or any part thereof could reasonably be considered to be in respect of copyright in respect of the production or reproduction of a computer program.
Question 21(d)
What is Revenue Canada's position with respect to the application of Part XIII of the Act to computer software royalties paid to a non-resident when the production and reproduction of the computer program is done by the non-resident and the royalty paid by the Canadian resident only relates to the Canadian resident's right to distribute the software in Canada?
Department's Position
Our position with respect to payments made by computer software distributors in respect of computer programs produced or reproduced outside Canada is presently under review. However, due to the many complex forms these arrangements may take, it appears that it may not be possible to develop any blanket policy statement that would adequately deal with every situation. Present indications are that in each case the particular agreements must be examined before a determination can be made whether or not such payments are subject to withholding tax.
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