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.
RE: Payments for Use of Video Tapes
This is in reply to your memorandum of November 29 concerning paragraph 212(5)(b) of the Income Tax Act and Article XIIIC of the Canada-U.S. Tax Convention (Convention).
On the basis of the information you provided, we agree that there is a strong indication that XXX did license XXX to show the XXX for a fee. We also agree with you that, normally, subsection 212(5) would apply to the fee. This conclusion is reached on the basis of the rule of interpretation that a particular provision of an enactment (212(5)) prevails over a more general one (212(1)(d)(vi)).
Section 3 of the Canada-United States of America Tax Convention Act, 1943 states that the provisions of the Convention will prevail in the event of inconsistency between the provisions of the Convention and the operation of any other law. Accordingly, if the fee is one described in Article XIIIC of the Convention, the exemption provided by the Article would prevail. In our opinion, the fee is a royalty for the right to use copyrights or in respect of the right to produce or reproduce any literary, dramatic, musical or artistic work. It is very doubtful that we would be successful in arguing that the fee was other than a royalty in view of that term's definition by the courts, especially in the case of M.N.R. v. Wain-Town Gas & Oil Company Limited, 52 DTC 1138 (Supreme Court of Canada).
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© Sa Majesté la Reine du Chef du Canada, 1980
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