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: Canada Tax Treaties Royalties Income Paid to Non-Resident
This is in reply to your letter of November 7, 1983 wherein you request our confirmation with respect to exemption from withholding tax on certain royalty income paid by a Canadian resident to a partnership formed under the laws of one of the U.S. states by two equal corporate partners, a Japanese corporation and a U.S. corporation. You also informed us that the royalty payment was paid by the Canadian resident on a copyright in respect of the production or reproduction of a book qualified as a literary work. Specifically, you request our confirmation that under Article XIII of the present U.S.-Canada Tax Treaty, on the basis that a partnership was an entity of the U.S., any royalties paid to the partnership would be totally exempt from Canadian withholding tax, and that under the proposed U.S.-Canada Tax Treaty only 50% of the royalties paid would be subject to 15% withholding tax pursuant to Article VIII of the Canada-Japan Tax Treaty.
As advised in our recent telephone conversation, it is our view that when an amount paid by a person resident in Canada to the non-resident person is a royalty on or in respect of a copyright in respect of the production or reproduction of a literary work such as in your instance, the amount will not be subject to the Part XIII tax by virtue of subparagraph 212(1)(d)(vi) of the Act. Hence, it is not necessary to determine if such payment made to the partnership would fall within the exempting provisions of Article XIII C of the Canada-U.S. Tax Convention since such payment is not subject to the withholding tax under the Canadian income tax law.
We trust the above will be of assistance to you.
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© Her Majesty the Queen in Right of Canada, 1983
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© Sa Majesté la Reine du Chef du Canada, 1983
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