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: Subsection 212(5)
Where the subject motion picture film or videotape has been or is to be used or reproduced in Canada, it is the view of this Division that payments by a resident to a non-resident for a right therein or to use thereof is subject to Part XIII tax, notwithstanding that a portion of the payments relate to their use or reproduction outside Canada. We attach a photocopy of a memorandum which, in the last paragraph on page 1 thereof, sets out our position in this regard.
In a situation recently dealt with by this Division, it is our understanding that the taxpayer had originally raised the question (verbally) with an official of the Department of Finance, suggesting that subsection 212(5) obviously had at it intention the imposition of a Part XIII tax only on the portion of the payment that related to the use or reproduction in Canada of the film or videotape. According to the taxpayer, the Finance official replied that the question was one of interpretation and should b-e put to Revenue Canada-Taxation who, the official presumed, would take the "soft" approach.
It is the view of this Division that to interpret subsection 212(5) in a manner that would have the effect of agreeing with the taxpayer's aforementioned view of the intent thereof; i.e., the "soft" approach, the word "that" at the beginning of the last line of subsection 212(5) would have to be replaced by the words "to the extent that it" ....
Would you please advise Finance of our views in the event that they wish to take further action.
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© Her Majesty the Queen in Right of Canada, 1983
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© Sa Majesté la Reine du Chef du Canada, 1983
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