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 Sir:
RE: Non-Resident Withholding TAx
This is in reply to your letter of April 3, 1985 concerning the applicability of the Canada-U.S. Income Tax Convention (1980) and the Canada-France Income Tax Convention (1975) to exempt from Part XIII withholding tax, royalties payable by a Canadian distributor to either an unrelated U.S. producer corporation or to an unrelated French producer corporation for the right to distribute in Canada various videotapes and videodisc products for home use.
We note that the facts in this request are substantially similar to those in previous requests, the latest being your letter of March 1, 1985 to which we have replied. Accordingly, we confirm that it remains our opinion that:
1. For the purposes of Article XII(3) of the Canada-U.S. Income Tax Convention (1980), royalties exempt pursuant thereto include royalties related to the sale or rental of videotapes for private viewing. This interpretation satisfies the intent of both governments as evidenced by the interpretation of that Article in the U.S. Treasury Department's Technical Explanation, dated April 26, 1984, and the Canadian government's acceptance of that Technical Explanation.
2. For the purposes of Article XII(3)(a) of the Canada-France Income Tax Convention (1975), royalties exempt pursuant thereto also include royalties related to the sale or rental of videotapes for private viewing.
3. The non-resident (producer) may be subject to tax in Canada in respect of such royalties under Part I of the Act if it carries on business in Canada either directly or through an agent, subject to any applicable treaty protection.
We trust the foregoing comments are of assistance to you.
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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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