Bowman
T.C.J.:
The
issue
in
this
appeal
is
whether
a
payment
made
in
1992
by
the
appellant,
a
resident
of
Canada,
of
$150,000
US
($184,070
CND)
to
Informix
Software
Inc.
(“Informix”)
a
resident
of
the
United
States,
is
subject
to
nonresident
withholding
tax
under
Part
XIII
of
the
Income
Tax
Act.
The
Minister
of
National
Revenue
assessed
withholding
tax
on
the
basis
that
the
payment
was
subject
to
withholding
tax
under
subparagraph
212(
1
)(J)(i)
of
the
Act.
The
appellant
contends
that
the
payment
is
not
taxable
under
Part
XIII
of
the
Act
for
essentially
three
reasons:
(a)
the
payment
does
not
fall
within
subparagraph
212(1)(d)(i)
at
all;
(b)
in
any
event
it
is
excluded
from
paragraph
212(1)(d)
by
subparagraph
212(l)(J)(vi);
(c)
in
the
further
alternative
it
is
protected
from
Canadian
tax
by
reason
of
Article
XII
of
the
Canada
—
U.S.
Income
Tax
Convention
(1980).
The
relevant
portions
of
section
212
of
the
Act
read
as
follows:
212
(1)
Every
non-resident
person
shall
pay
an
income
tax
of
25%
on
every
amount
that
a
person
resident
in
Canada
pays
or
credits,
or
is
deemed
by
Part
I
to
pay
or
credit,
to
the
non-resident
person
as,
on
account
or
in
lieu
of
payment
of,
or
in
satisfaction
of,
Rents,
Royalties,
ETC
(d)
rent,
royalty
or
similar
payment,
including,
but
not
so
as
to
restrict
the
generality
of
the
foregoing,
any
payment
(i)
for
the
use
of
or
for
the
right
to
use
in
Canada
any
property,
invention,
trade-name,
patent,
trade-mark,
design
or
model,
plan,
secret
formula,
process
or
other
thing
whatever,
(ii)
for
information
concerning
industrial,
commercial
or
scientific
experience
where
the
total
amount
payable
as
consideration
for
that
information
is
dependent
in
whole
or
in
part
on
(A)
the
use
to
be
made
of,
or
the
benefit
to
be
derived
from,
that
information,
(B)
production
or
sales
of
goods
or
services,
or
(C)
profits,
(iii)
for
services
of
an
industrial,
commercial
or
scientific
character
performed
by
a
non-resident
person
where
the
total
amount
payable
as
consideration
for
those
services
is
dependent
in
whole
or
in
part
on
(A)
the
use
to
be
made
of,
or
the
benefit
to
be
derived
from,
those
services,
(B)
production
or
sales
of
goods
or
services,
or
(C)
profits,
but
not
including
a
payment
made
for
services
performed
in
connection
with
the
sale
of
property
or
the
negotiation
of
a
contract,
(iv)
made
pursuant
to
an
agreement
between
a
person
resident
in
Canada
and
a
non-resident
person
under
which
the
non-resident
person
agrees
not
to
use
or
not
to
permit
any
other
person
to
use
any
thing
referred
to
in
subparagraph
(i)
or
any
information
referred
to
in
subparagraph
(11),
or
(v)
that
was
dependent
on
the
use
of
or
production
from
property
in
Canada
whether
or
not
it
was
an
instalment
on
the
sale
price
of
the
property,
but
not
including
an
instalment
on
the
sale
price
of
agricultural
land,
but
not
including
(vi)
a
royalty
or
similar
payment
on
or
in
respect
of
a
copyright
in
respect
of
the
production
or
reproduction
of
any
literary,
dramatic,
musical
or
artistic
work.
Article
XII
of
the
Convention
reads:
Article
XII
Royalties
I.
Royalties
arising
in
a
Contracting
State
and
paid
to
a
resident
of
the
other
Contracting
State
may
be
taxed
in
that
other
State.
2.
However,
such
royalties
may
also
be
taxed
in
the
Contracting
State
in
which
they
arise,
and
according
to
the
laws
of
that
State;
but
if
a
resident
of
the
other
Contracting
State
is
the
beneficial
owner
of
such
royalties,
the
tax
so
charged
shall
not
exceed
10
per
cent
of
the
gross
amount
of
the
royalties.
3.
Notwithstanding
the
provisions
of
paragraph
2,
copyright
royalties
and
other
like
payments
in
respect
of
the
production
or
reproduction
of
any
literary,
dramatic,
musical
or
artistic
work
(but
not
including
royalties
in
respect
of
motion
pictures
and
works
on
film,
videotape
or
other
means
of
reproduction
for
use
in
connection
With
television)
arising
in
a
Contracting
State
and
beneficially
owned
by
a
resident
of
the
other
Contracting
State
shall
be
taxable
only
in
that
other
State.
4.
The
term
“royalties”
as
used
in
this
Article
means
payments
of
any
kind
received
as
a
consideration
for
the
use
of,
or
the
right
to
use,
any
copyright
of
literary,
artistic
or
scientific
work
(including
motion
pictures
and
works
on
film,
videotape
or
other
means
of
reproduction
for
use
in
connection
with
television),
any
patent,
trade
mark,
design
or
model,
plan,
secret
formula
or
process,
or
for
the
use
of,
or
the
right
to
use,
tangible
personal
property
or
for
information
concerning
industrial,
commercial
or
scientific
experience,
and,
notwithstanding
the
provisions
of
Article
XIII
(Gains),
includes
gains
from
the
alienation
of
any
intangible
property
or
rights
described
in
this
paragraph
to
the
extent
that
such
gains
are
contingent
on
the
productivity,
use
or
subsequent
disposition
of
such
property
or
rights.
The
appellant
is
an
Ontario
corporation
that
at
all
material
times
carried
on
the
business
of
developing
software.
It
was
incorporated
in
1984
as
CS
Computing
Services
Inc.
In
1993
it
changed
its
name
to
Angoss
Software
International
Limited
and
in
1997
to
its
present
name.
Prior
to
1992
it
acquired
a
computer
software
program
called
“SmartWare”
from
Informix.
It
functioned
as
a
value
added
reseller
of
the
software
which
it
bought
from
Informix
in
shrink-wrapped
(i.e.
manufactured
and
packaged)
form
and
installed.
It
had
no
right
to
manufacture
the
product.
By
1992,
the
appellant
decided
that
it
wanted
to
start
manufacturing
the
product
SmartWare
and,
about
the
same
time,
Informix
decided
it
wanted
to
get
out
of
manufacturing
that
product.
The
result
was
two
agreements,
a
Source
Code
License
Agreement
and
a
Value
Added
Reseller
License
Agreement.
The
agreements,
of
course,
speak
for
themselves
but
in
broad
outline
the
object
of
the
Source
Code
License
Agreement
was,
first,
to
allow
the
appellant
to
examine
the
source
code
of
SmartWare
for
sixty
days.
If
it
decided
it
wanted
to
retain
access
to
the
SmartWare
source
code
it
was
to
pay
Informix
the
sum
of
$150,000
US,
the
amount
in
issue
in
this
case.
The
second
purpose
was,
if
it
decided
to
pay
the
$150,000
US,
to
grant
it
a
license
to
use
the
source
code
in
the
manufacture
of
Software
which
it
intended
to
sell.
The
Source
Code
License
Agreement
was
signed
at
the
same
time
as
the
Value
Added
Reseller
License
Agreement.
Each
of
the
two
agreements
refers
to
the
other
and
it
was
obviously
intended
that
they
be
complementary
to
each
other.
The
Value
Added
Reseller
License
Agreement
was
cobbled
together
in
a
singularly
peculiar
way.
Its
purpose
was
evidently
to
complement
the
Source
Code
License
Agreement
by
providing
for
license
fees
based
upon
the
number
of
copies
of
the
software
manufactured.
The
Value
Added
Reseller
License
Agreement
in
its
original
form
was
presumably
the
sort
of
agreement
under
which
the
appellant
and
Informix
had
operated
when
the
appellant
simply
bought
the
software
and
resold
it.
Such
an
agreement
would
have
been
entirely
inappropriate
for
the
licensing
of
the
source
code
to
permit
the
appellant
to
manufacture
the
product.
Therefore,
substantial
portions
were
deleted
and
replaced
by
an
amending
agreement
signed
at
the
same
time
as
the
original
agreement.
Relevant
portions
of
the
Source
Code
License
Agreement
are
as
follows:
Source
Code
License
Agreement
This
is
an
Agreement
between
Informix
Software.
Inc.
(“Informix”),
a
Delaware
corporation,
and
CS
Computing
Services,
Inc.
(“Licensee”),
a
Canadian
corporation,
and
is
effective
pursuant
to
Section
6.A
of
this
Agreement.
WHEREAS,
Informix
is
in
the
business
of
designing,
developing,
marketing
and
licensing
computer
software
program;
and
WHEREAS,
Informix
is
either
the
author
and
owner
of
certain
computer
programs
described
in
Exhibit
“A”
hereto
(“Products”),
or
has
the
right
to
grant
licenses
for
the
use
and
all
other
dispositions,
either
in
whole
or
in
part,
of
the
Products
Source
Code
as
hereinafter
defined;
and
WHEREAS,
Licensee
desires
to
obtain
royalty-free
access
to
the
Source
Code
for
a
period
of
sixty
(60)
days
after
receipt
of
the
Source
Code
from
Informix
(“Review
Period”),
in
order
to
determine
whether
it
will
be
feasible
for
Licensee
to
progress
with
certain
applications
Licensee
is
developing,
and
Informix
wishes
to
grant
access
to
the
Source
Code
for
this
purpose;
and
WHEREAS,
on
or
before
the
expiration
of
the
Review
Period,
Licensee
intends
to
notify
Informix
of
its
wish
to
retain
access
(for
the
license
fee
set
forth
in
Paragraph
2)
to
the
Source
Code
for
application
development,
and
WHEREAS,
Products
Source
Code
as
used
herein
is
defined
as
the
human
readable
embodiment
of
the
computer
code
associated
with
Products
implementing
specific
algorithms
from
which
the
Products
will
be
derived,
whether
such
embodiment
is
contained
on
paper,
magnetic
media,
electronic
impulses
or
other
form
or
media;
and
WHEREAS,
Products
Object
Code
as
used
herein
is
defined
as
the
computer
executable
embodiment
of
the
computer
code
associated
with
a
Product
derived
from
the
related
Source
Code
by
a
process
normally
referred
to
as
compilation
or
other
process
which
translates
the
Source
Code
or
some
intermediate
code
derived
therefrom
to
a
form
which
is
understood
and
acted
upon
by
computers
regardless
of
the
media
on
which
contained;
NOW,
THEREFORE,
in
consideration
of
these
premises
and
other
considerations,
the
parties
hereto
agree
as
follows:
1.
Source
Code
License
A.
The
terms
“Products”,
“Source
Code”
and
“Object
Code”
shall
have
the
meanings
set
forth
above
for
all
purposes
in
connection
with
this
Agreement.
B.
Informix
agrees
to
grant
and
Licensee
agrees
to
accept
on
the
terms
and
conditions
herein,
and
with
the
express
restrictions
as
set
forth
below,
a
nonexclusive,
indivisible
license,
right
and
privilege
to
use
and
copy,
in
whole
or
in
part,
the
Products
Source
Code,
and
to
permit
and
restrict
access
to
and
use
of
the
Source
Code
only
by
Licensee
and
its
employees,
only
to
the
extent
necessary
for
the
purpose
of
examining
the
Source
Code
for
the
Review
Period,
and
thereafter,
in
the
event
of
its
exercise
of
its
option
to
retain
the
Source
Code
upon
payment
of
the
fee
as
set
forth
in
Paragraph
2
of
this
Agreement,
solely
for
the
purpose
of
supporting
the
development
and
maintenance
of
Licensee’s
ANGOSS
software
on
hardware
systems
on
which
Licensee
chooses
to
make
operable
the
Products
(as
combined
into
the
ANGOSS
software).
The
Source
Code
will
be
delivered
by
Informix
to
Licensee
only
as
operable
on
IBM
PC-compatible
platforms
operating
in
conjunction
with
the
DOS
operating
system.
C.
Subject
to
the
provisions
of
Section
8
of
this
Agreement,
the
license
herein
granted
does
not
apply
to
other
Informix
Products
Source
Codes
in
existence
or
to
be
designed,
manufactured,
assembled
or
sold
by
Informix.
In
the
event
that
Licensee
desires
to
obtain
the
rights
to
such
new
or
other
types
of
Informix
Products
Source
Codes,
the
granting
of
such
rights
shall
be
subject
to
a
separate
agreement
then
to
be
negotiated.
D.
In
consideration
for
the
Products
Source
Code
license
herein
granted,
Informix
expressly
prohibits,
and
Licensee
expressly
agrees
to
refrain
from
the
distribution,
sale,
manufacture
or
copy
for
distribution
or
sale,
and/or
any
other
disposition,
disclosure,
release
to
or
use
by
any
third
party
of
the
Products
Source
Code.
E.
In
consideration
for
the
Products
Source
Code
license
herein
granted,
Informix
expressly
prohibits,
and
Licensee
expressly
agrees
to
refrain
from
the
distribution,
sale,
manufacture
or
copy
for
distribution
or
sale,
and/or
any
other
disposition,
disclosure,
or
release
of
the
Products
in
executable
Object
Code
form,
including
all
compilations
of
the
Products
Source
Code,
or
any
part
thereof,
into
executable
Object
Code
form,
except
as
provided
for
in
Paragraph
1
(B),
supra.
It
is
acknowledged.
however,
that
Licensee
desires
to
obtain
the
rights
to
distribute,
sell,
manufacture
or
copy
for
distribution
or
sale,
and/or
make
any
other
disposition,
disclosure,
release
or
use
of
the
Products
in
executable
Object
Code
form,
including
all
compilations
of
the
Products
Source
Code,
or
any
part
thereof,
into
executable
Object
Code
form,
and
the
granting
of
such
rights
are
subject
to
a
separate
agreement
executed
contemporaneously
with
this
Agreement.
F.
Rights
granted
by
Informix
to
Licensee
under
this
Agreement
shall
in
no
manner
affect
exclusive
ownership
by
Informix
of
the
Products
Source
Code,
or
any
and
all
other
software
products
owned
and
designed,
manufactured,
distributed,
sold
or
otherwise
disposed
of
by
Informix.
2.
Payment
for
and
Delivery
of
Products
Source
Code
In
the
event
Licensee
desires
to
retain
access
to
the
Source
Code
after
the
Review
Period,
on
the
earlier
of
the
expiration
of
the
Review
Period
or
the
date
when
Licensee
notifies
Informix
of
its
desire
to
begin
modification
and
development
effort
on
the
Source
Code,
Licensee
shall
pay
to
Informix
the
nonrefund-
able
amount
of
One
Hundred
Fifty
Thousand
Dollars
Exactly
(U.S.
$150,000.00)
said
money
of
which
is
to
be
paid
at
4100
Bohannon
Drive,
Menlo
Park,
California
94025,
in
United
States
Dollars
without
deductions
of
any
kind.
Informix
agrees
that
within
five
(5)
days
of
the
Effective
Date
of
this
Agreement,
Informix
will
ship
to
Licensee
the
Source
Code
operable
on
an
IBM
PC-
compatible
operating
in
conjunction
with
the
DOS
operating
system.
4.
Copyright
Notices,
Legends,
Trademarks
and
Tradenames,
and
Trade
Secrets
A.
Licensee
agrees
to
include
the
following
notice
in
any
ANGOSS
products
into
which
the
Products,
in
whole
or
in
part,
have
been
compiled
and/or
incorporated:
“Portions
of
this
product
are
licensed
from
and
are
proprietary
to
Informix
Software,
Inc.,
and
are
the
subject
of
copyrights
1979
—
1991
in
Informix
Software,
Inc.”
B.
Licensee
further
agrees
not
to
otherwise
use
any
trademark
or
tradename
of
Informix,
which
are
admitted
to
be
the
sole
and
exclusive
property
of
Informix,
without
the
prior
written
consent
of
Informix.
17.
Implementation
and
Modifications
A.
This
Agreement
states
the
entire
agreement
of
the
parties
on
the
subjects
hereof;
provided,
however,
that
it
is
acknowledged
that
this
Agreement
is
executed
contemporaneously
with
the
Authorized
Value-Added
Reseller
Agreement
between
Informix
and
Licensee...
The
Value
Added
Reseller
License
Agreement
between
Informix
and
the
appellant,
as
licensee,
as
amended,
provided
in
part:
1.]
Nonexclusive
License
Grant.
Informix
hereby
grants
Licensee,
subject
to
Paragraph
1.2
of
this
Agreement,
the
following
royalty-bearing,
non-
transferrable,
nonexclusive
licenses
which
may
be
exercised
solely
within
the
Distribution
Territory,
Licensee
may:
a.
obtain
from
Informix
the
distribution
masters
in
order
for
Licensee
to
manufacture
Products
in
whole
or
in
part
for:
(a)
internal
development
purposes
of
the
VAR
Program;
and
(b)
distribution
to
Sublicensee
and
End
User
in
conjunction
with
the
Application
Package.
Licensee
agrees
to
include
the
following
notice
in
any
ANGOSS
products
into
which
the
Products,
in
whole
or
in
part,
have
been
compiled
and/or
incorporated:
“Portions
of
this
product
are
licensed
from
and
are
proprietary
to
Informix
Software,
Inc.,
and
are
the
subject
of
copyrights
1979
—
1991
in
Informix
Software,
Inc.”
Licensee
will
utilize
the
ANGOSS
serialization
process
to
keep
records
of
all
copies
into
which
the
Product
are
compiled
and/or
incorporated.
b.
grant
the
right
for
one
or
more
Distributors
to
distribute
and
sublicense
the
Products,
with
or
as
part
of
the
Application
Packages,
to
Resellers
or
End
Users;
and
Exhibit
B
Fees,
Discounts
and
Payments
Section
1.
Discounts/Fees.
Discount
Alternative.
It
is
acknowledged
that
Licensee
will
be
evaluating
the
Source
Code
to
Product
pursuant
to
the
Source
Code
License
Agreement
executed
contemporaneously
herewith.
Licensee
may
subsequently
agree
to
retain
the
Source
Code
for
purposes
of
making
modifications
in
order
to
market
and
distribute
the
modified
Product
in
conjunction
with
the
Application
Package.
In
the
interim,
Licensee
may
opt
to
acquire
licenses
to
the
Products
at
discounts
applicable
according
to
the
following:
A.
From
the
Effective
Date
of
this
Agreement
until
March
31,
1992,
Licensee
may
opt
to
acquire
licenses
to
the
Object
Code
directly
from
Informix
at
a
fee
to
Informix
of
$75.00
(U.S.)
per
copy
of
SmartWare
II
(version
1.5)
(or
Licensee
may
substitute
LAN
access
nodes);
in
such
event,
the
copies
of
Object
Code
versions
of
the
Product
will
be
provided
to
Licensee
in
the
manner
most
cost
effective
to
Informix,
including
with
minimally
adequate
packaging;
B.
If
Licensee
manufactures
the
Products
by
means
of
employing
the
Source
Code,
as
it
may
be
modified
by
Licensee
pursuant
to
the
Source
Code
Agreement
executed
contemporaneously
with
this
Agreement,
Licensee
shall
pay
a
per
copy
fee
to
Informix
according
to
the
following:
|
Copies
|
1-1000
|
U.S.$5().O()/copy
|
|
1001-5000
|
U.S.$40.00/copy
|
|
5001
+
|
U.S.$25.00/copy
|
Licensee
may
acquire
User
Documentation
for
the
Products
directly
from
Informix,
at
a
fee
per
copy
of
one
hundred
dollars
(US$100).
For
the
sake
of
completeness
I
mention
that
in
January
1993
a
new
International
Distributions
License
Agreement
with
Manufacturing
Rights
was
entered
into
by
the
appellant
and
Informix.
This
subsequent
agreement,
which
superseded
the
two
earlier
agreements,
is
not
relevant
to
the
nature
of
the
payment
made
under
the
Source
Code
License
Agreement.
The
question
is,
therefore,
what
the
sum
of
$150,000
US
was
paid
for.
The
respondent
argues
that
it
was:
(d)
rent,
royalty
or
similar
payment,
including,
but
not
so
as
to
restrict
the
generality
of
the
foregoing,
any
payment
(i)
for
the
use
of
or
for
the
right
to
use
in
Canada
any
property,
...secret
formula,
process
or
other
thing
whatever,
...
The
appellant
concedes
that
it
is
arguable
that
the
payment
falls
within
this
provision,
but
contends
that
if
it
is
a
royalty
or
similar
payment
it
is
in
respect
of
a
copyright,
and
is
therefore
exempted
by
subparagraph
212(l)(J)(vi).
The
term
“royalty”
generally
is
used
to
denote
a
periodic
payment
based
on
use,
production
or
sales.
Counsel
for
the
respondent
contends
that
even
if
the
$150,000
US
is
not
a
royalty
or
similar
payment,
the
term
“any
payment”
is
not
eiusdem
generis
with
rent
or
royalty
and
is
broad
enough
to
cover
a
single
lump
sum
payment.
The
$150,000
US
is
described
in
the
Source
Code
License
Agreement
as
a
“license
fee”
and
this
is,
in
my
opinion,
precisely
what
it
is
—
a
fee
for
the
use
of
the
source
code.
As
such
I
think,
notwithstanding
the
absence
of
periodicity,
it
is
“similar”
to
a
royalty.
Counsel
for
the
respondent
suggested
that
if
the
$150,000
US
had
to
be
characterized
it
was
a
form
of
earnest
or
payment
to
bind
the
bargain
to
take
the
license,
or
to
show
the
appellant’s
good
faith
and
serious
commitment
to
the
continued
relationship.
I
think
this
contention
is
susceptible
of
two
responses.
First,
the
payment
was
not
to
be
made
until
the
appellant
had
examined
the
source
code
and
had
definitely
decided
to
proceed
with
the
li-
cense.
Second,
if
the
respondent’s
suggested
characterization
were
correct,
the
payment
would
not
fall
within
subparagraph
212(l)(d)(i)
at
all.
The
terms
royalty
or
similar
payment
are
used
in
subparagraphs
212(
1
)(<7)(i)
and
(vi)
and
have
the
same
meaning.
Was
the
payment
“on
or
in
respect
of
a
copyright
in
respect
of
the
production
or
reproduction
of
any
literary,
dramatic,
musical
or
artistic
work”?
It
is
clear
beyond
any
doubt
that
copyright
subsists
in
a
source
code
computer
program.
This
was
true
even
before
the
amendment
to
the
Copyright
Act,
which
defined
“literary
work”
to
include
computer
programs.
In
Apple
Computer
Inc.
v.
Mackintosh
Computers
Ltd.
(1990),
71
D.L.R.
(4th)
95
(S.C.C.),
the
Supreme
Court
of
Canada,
affirming
the
Federal
Court,
Trial
Division
and
the
Federal
Court
of
Appeal,
held
that
source
codes
embedded
in
silicone
chips
were
protected
by
subsection
3(1)
of
the
Copyright
Act,
R.S.C.
1970,
c.
C-30.
Subsection
3(1)
of
that
Act
read
as
follows:
3
(1)
For
the
purposes
of
this
Act,
“copyright”
means
the
sole
right
to
produce
or
reproduce
the
work
or
any
substantial
part
thereof
in
any
material
form
whatever...
and
includes
the
sole
right
(a)
to
produce,
reproduce,
perform
or
publish
any
translation
of
the
work:
(d)
in
the
case
of
a
literary,
dramatic,
or
musical
work,
to
make
any
record,
perforated
roll,
cinematograph
film,
or
other
contrivance
by
means
of
which
the
work
may
be
mechanically
performed
or
delivered.
In
Computer
Law,
Sookman,
Barry
B.
1991
Thomson
Canada
Limited,
it
is
stated
at
pages
3-66
and
3-67:
(a)
Source
Code
In
numerous
cases
decided
before
the
enactment
of
Bill
C-60,
computer
programs
in
their
source
code
formats
were
found
to
meet
the
requirements
of
copyrightability
as
literary
works
In
IBM
Corp.
v.
Ordinateur
Spirales
and
in
Apple
Computer
Inc.
v.
Mackintosh
Computers
Ltd.,
Reed
J.
expressed
the
opinion
that
source
codes
are
protected
under
the
Act
as
expressions
of
thought
in
an
original
alphanumeric
form
It
is
not
necessary
that
what
is
written
or
recorded
should
express
a
meaning
in
a
language;
source
codes
are
given
the
same
protection
as
a
list
of
meaningless
words
used
as
telegraph
codes,
and
as
a
system
of
shorthand
Numerous
decisions
in
the
United
States
have
likewise
protected
source
code
as
a
literary
work
of
authorship
fixed
in
a
tangible
medium
of
expression.
(The
numerous
footnotes
are
omitted.)
It
follows
therefore
that
a
computer
source
code
is
a
literary
work
in
respect
of
which
copyright
subsists.
It
is
equally
clear
that
the
payment
was
for
the
right
to
use
or
reproduce
the
source
code
and
was
therefore
“on
or
in
respect
of
a
copyright
in
respect
of
the
production
or
reproduction
of
any
literary,
work.”
In
the
result,
the
payment
is
exempt
from
withholding
tax
under
subparagraph
212(l)(J)(vi)
of
the
Act.
Even
if
I
am
wrong
in
rejecting
the
respondent’s
argument
that
the
payment
is
caught
by
the
words
“...any
payment
for
the
use
of
or
the
right
to
use
in
Canada
any
...
other
thing
whatever”
in
the
opening
words
of
paragraph
212(
1
)(J)
and
subparagraph
(i)
thereof
but
not
by
the
words
“royalty
or
similar
payment”,
in
subparagraph
(vi),
I
think
the
payment
is
in
any
event
protected
by
the
Convention.
“Royalties”
is
defined
in
Clause
4
of
Article
XII
to
mean
“payments
of
any
kind
received
as
a
consideration
for
the
use
of,
or
the
right
to
use,
any
copyright
of
literary,
artistic
or
scientific
work...”.
The
$150,000
US
clearly
is
such
a
payment.
The
appeal
is
allowed
with
costs
and
the
assessment
of
non-resident
withholding
tax
is
vacated.
Appeal
allowed.
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