23 January 1998 Income Tax Severed Letter 9730077 - Copyright royalties

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.

SUMMARY: Copyright royalties—ITA-212(1)(d)(1)—Tax treatment of a royalty in respect of a copyright of a dramatic work for purposes of the Canada-United States Income Tax Convention.

Please note that the following document, although believed to be correct at the time of issue, may not represent the current position of the Department. Prenez note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle du ministère.

Revenue Canada Revenu Canada T2001 MEMORANDUM NOTE DE SERVICE Rev.94 DATE May 29, 1998

?TO ? FROM A DE David R. Senécal Ottawa Tax Services Office International Section International Tax Programs Section Tel: (613) 957-9796

?Attention: Phil Fortier ? FILE DOSSIER 973007

SUBJECT: OBJET: Copyright Royalties - Right to Perform a Dramatic Work

This is in reply to your memorandum of November 10, 1997, wherein you request our views regarding the taxation of a royalty paid by XXXXXXXXXX is of the view that the royalty is exempt from Part XIII tax by virtue of subparagraph 212(1)(d)(vi) of the Income Tax Act (the “Act”) in that the royalty is in respect of a copyright in respect of the production of a dramatic work.

In our view, the royalty was paid for the right to perform the dramatic work rather than for the right to produce the work and, consequently, the royalty is subject to Part XIII tax pursuant to subparagraph 212(1)(d)(i) of the Act.

Section 3 of the Copyright Act defines “copyright” to mean the sole right to produce or reproduce the work or any substantial part thereof in any material form whatever, to perform the work or any substantial part thereof in public or, if the work is unpublished, to publish the work or any substantial part thereof, and includes the sole right

(a) to produce, reproduce, perform or publish any translation of the work,

(b) .....

It is clear from the above definition that the right to perform a work in public is a separate and distinct right from the right to produce the work which would result in some form of tangible property being brought into existence. In this case, the copyright royalty which has been paid is in respect of the right to perform the work in public and not in respect of the right to produce or reproduce. Consequently, the royalty payment made by XXXXXXXXXX does not qualify for exemption from Part XIII tax on the basis of subparagraph 212(1)(d)(vi) of the Act or paragraph 3 of Article XII of the Canada-U.S. Income Tax Convention.

We trust that our comments will be of assistence to you and we would be pleased to answer any further questions that you may have with respect to to this matter.

For Director Reorganizations and International Division Income Tax Rulings and Interpretations Directorate