Copyright and Licences


Frontenac Shoe Ltée v. MNR, 63 DTC 1129 (Ex Ct)

The taxpayer's shareholder who in his spare time had developed a detailed catalogue to facilitate sales of shoes by the taxpayer, sold his copyright in the catalogue to the taxpayer in consideration for the right to receive 3.5% of the taxpayer's direct sales of shoes until such time as the total received reached a specified sum, or his copyright expired. In finding that the annual amounts paid by the taxpayer were deductible, Noel J. indicated that the transaction did not give rise to a permanent benefit to the taxpayer and noted that the expenses in question were of a recurring nature that were payable only so long as the taxpayer made direct sales.

See Also

Caputo v. The Queen, 2008 DTC 3596, 2008 TCC 263

A $350 licence fee paid by the taxpayer for a 20-year licence to sell a customer loyalty card in specified territories was a capital outlay.

Buston v. The Queen, 93 DTC 1048, [1993] 2 CTC 2720 (TCC)

The taxpayer, who was in the business of fishing roe herring and salmon, paid $21,000, $20,000 and $5,000 in three separate transactions to acquire the exclusive right to use fishing licences for extended or indefinite periods of time, and paid additional sums to acquire two of the licence holders' skiffs. Although the licences themselves were renewed annually in the discretion of the Department of Fisheries, the practice of the Department was to renew the licences in favour of the existing holders and, following their death, members of the immediate family.

In finding that the expenditures were made on income account, Brulé, TCCJ. noted that the beneficial interest of the taxpayer in the licences was not valid beyond December 31 of each year and indicated that the expenditures had been made by the taxpayer in the course of and for the purpose of his regular day-to-day business operations.

Administrative Policy

IT-143R2 "Meaning of Eligible Capital Expenditure"

The cost of obtaining a trademark registration is fully deductible.