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.
Dear Sirs:
RE: Non-resident withholding tax
This is in reply to your letter of December 17, 1986 requesting that we confirm your understanding of a number of issues related to non-resident withholding requirements of payments for live television programming.
Our Comments
1) It is our view that non-scripted live television programming of any kind, is not subject to copyright under current Canadian copyright law. Thus a payment in respect of live television programming is not a royalty payment for purposes of Article XIII of the 1980 Canada - U.S. Income Tax Convention (the "Treaty"). As a result they may be subject to a withholding tax of 25% by virtue of paragraph 212(1)(d) of the Act and Article 22 of the Treaty unless, of course, they are considered business profits t-o the non-resident and the non-resident does not have a permanent establishment in Canada. This position is based on the assumption that the signal is direct from the event being shown and is not based on some intermediate source such as a video tape; for example, the latter may occur when there is a delay of several seconds before being broadcast to viewers.
2) The Department considers pre-scripted programming to be subject to copyright in Canada and thus payments in respect thereof are exempt from withholding tax where they are in respect of the production or reproduction of any literary, dramatic, musical or artistic work and are not in respect of motion picture film or a film or videotape for use in connection with television broadcasting. Such royalty payments are subject to withholding tax however when they are in respect of motion picture film or a fil-m or videotape for use in connection with television broadcasting.
3. Instant replay of non-scripted or pre-scripted live programming is considered to be sourced in a videotape which is for use in connection with television broadcasting and is thus subject to withholding tax pursuant to 212(5) of the Act and Article XIII of the Treaty.
4. Whether a particular type of programming will be considered a literary, dramatic, musical or artistic work is a question of fact to be determined from an examination of all the related or associated factors of a particular event. It is not felt however that sporting events such as hockey or football would qualify under the above description.
5. Where a particular program contains both non-scripted and pre-scripted live portions and instant replays, the program fee will have to be apportioned on the basis of the time involved. This is a question of fact the determination of which can probably be made by having the particular event reviewed by District Office personnel.
We trust you will find our comments have satisfactorily replied to your queries.
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© Her Majesty the Queen in Right of Canada, 1987
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© Sa Majesté la Reine du Chef du Canada, 1987
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