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 response to your memorandum of December 8th concerning the above-referenced U. S. company engaged in the computer "software" business.
We have reviewed the documentation submitted by your office and provided the computer programs (software) is copyrightable or already copywritten, we are of the view that the license fees would be royalty payments that are not subject to non-resident withholding tax under the provisions of paragraph 212(1)(d). These payments would be exempt from the withholding tax by virtue of Article XIIIC of the Canada-U. S. Tax Convention.
The update agreement, as we understand, provides for normal updating of the copywritten material already dealt with under the license fee comments above. Provided the facts support this understanding then we are of the view that the payments made under the update agreement would be exempt by the operation of Article XIIIC of the tax convention in a manner similar to the license fee.
Should your review of the situation turn up any varied facts from the above, we would be pleased to review the new information at that time.
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© Her Majesty the Queen in Right of Canada, 1980
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© Sa Majesté la Reine du Chef du Canada, 1980
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