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: Withholding Tax on Royalty Payments to U.S. Residents re Videotapes
This is in reply to your letter of December 3, 1984 concerning royalties paid to U.S. residents for the use or right to use videotapes on aircraft in Canada (i.e., domestic flights).
For the purposes of Article XII(3) of the Canada-U.S. Income Tax Convention (1980) (and Article XIIIC of the previous convention), it is our view that a royalty paid for the use of a videotape of a motion picture film is a "royalty in respect of a motion picture film". Hence, it is our view that such royalties are not exempt from the Part XIII tax exigible pursuant to paragraph 212(5)(a) of the Income Tax Act. Since it is our understanding that the videotapes in question are videotapes of motion picture films (i.e., the underlying property generating the royalty revenue is a motion picture film), you should withhold from payments made in respect thereof the applicable rate of withholding tax. If, however, the underlying property is a videotape production, the royalties in question are not subject to Part XIII tax and no withholding is required.
We hope that the above information is satisfactory for your purposes.
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© Her Majesty the Queen in Right of Canada, 1985
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© Sa Majesté la Reine du Chef du Canada, 1985
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