4 May 1999 External T.I. 9910785 - EXPENSE OF PUBLISHING - NATIONAL LIBRARY

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.

Please note that the following document, although believed to be correct at the time of issue, may not represent the current position of the Department.

Prenez note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle du ministère.

Principal Issues: Deductibility of costs incurred by publishers to meet requirement to deposit two copies of publication with the National Library of Canada.

Position: Might be deductible.

Reasons: If expense incurred in course of earning income from business or property; if employee, only as provided in 8(1)(q).

National Library of Canada
Acquisitions and Bibliographic Services
395 Wellington Street 991078
Ottawa, Ontario B.G. Dodd
K1A 0N4 957-8953

Attention: Mr. John Stegenga

Chief, Legal Deposit

May 4, 1999

Dear Sirs:

Re: Legal Deposit

We are writing in reply to your letter dated April 20, 1999.

You advise that pursuant to the National Library Act and accompanying regulations, every publisher in Canada must deposit with the National Library of Canada two copies, at their cost, of whatever it is that is published. (Certain exemptions may reduce the required number of copies to one.) You advise that the type of material deposited varies and includes, for example, regular printed books, magazines, microfilms, CD’s, CD-ROM’s, and videos. You further advise that the types of publishers vary and include commercial enterprises, private citizens and non-profit groups. The National Library of Canada issues a written receipt to acknowledge that a publisher has complied with these requirements. This practice is referred to as “legal deposit.”

You have requested our opinion on whether publishers may deduct as a business expense their costs of labour and material for producing the requisite copies to be deposited with the National Library.

It is our view that where a person incurs such expenses in the course of earning income from a business or property which is, or includes, the publishing of the particular book, etc. which is to be so deposited, such expenses would be deductible in computing income from that business or property for income tax purposes.

In the case of an employee in receipt of income from an office or employment that includes income from an artistic activity that is the composition by the employee of a literary work, paragraph 8(1)(q) of the Income Tax Act provides a deduction for expenses incurred for the purpose of earning the income from that activity. In our view, expenses incurred by such an employee in connection with the legal deposit of copies with the National Library of Canada would be eligible under this provision. In general, the maximum amount of this deduction is $1000 or 20% of the related income for the year, whichever is less.

Where the expenses are not incurred in connection with earning income from a business or property, or from employment, as discussed above, they would not be deductible for income tax purposes.

We hope this will be of assistance to you.

Yours truly,

for Director
Resources, Partnerships and Trusts Division
Income Tax Rulings and Interpretations Directorate
Policy and Legislation Branch

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