CRA rules that custom software distribution fees in substance were for right to "reproduce" copyright

Licence fees paid by a Canadian non-share corporation to its non-resident sole member (Forco), a U.S. tax-exempt organization, for the right to distribute Forco custom software and related documentation to Canadian sub-licensees, were ruled to be exempt from Part XIII tax.  "Payment for distribution rights in this case are considered copyright royalties as the right to distribute is viewed as a component of the right to reproduce the software or is ancillary to such a right."

Not a slam dunk (the application was received in 2012) - perhaps because Canco will not really reproduce the software in the normal sense of the word, and instead will on-deliver copies of the software received from Forco.

Neal Armstrong.  Summary of 2014 Ruling 2012-0462801R3 under s. 212(1)(d)(vi).