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.
This is in reply to your memorandum concerning the treatment of non-resident withholding tax concerning royalties in respect of any literary, dramatic, musical or artistic work on videotape or other means of reproduction.
Your memorandum indicates that the term "private use" is not a defined term nor does it appear in legal dictionaries, and it is your view that the authors of the U.S. Technical Explanation used the term "private (home) use to give it a more restrictive meaning.
Officials of the Department of Finance advised us that during the Canada-United States negotiations it was agreed that the words "for use in connection with television" should be restricted. Since this decision took place late in the negotiations, it was decided to do this through the U.S. Treasury Department's Technical Explanation rather than amend the Convention. Finance officials were primarily concerned with television broadcasting, and were prepared to give up the right to tax royalties paid in connection with the rental of video cassettes for private viewing. This is what led to the adoption of the phrase "private (home) use".
Given this background and the fact that the Second Protocol to the Canada-United Kingdom Income Tax Convention amends paragraph 4 of Article XII by adding the word "broadcasting" after the phrase "for use in connection with television" it can be concluded that the same intention should be ascribed to the relevant words in the United States Convention. We also confirmed this view with U.S. Treasury officials by telephone.
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© Sa Majesté la Reine du Chef du Canada, 1986
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