21 December 1998 External T.I. E9830115 - RESIDENT RECEIVING ROYALTY INCOME

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: Are royalty or royalty-like revenues received by a Canadian resident taxable ?

Position: YES,

Reasons: A Canadian resident pays income tax on his world-wide income

XXXXXXXXXX 	C. Tremblay
		983011
December 21, 1998

Dear XXXXXXXXXX:

Re: Canadian Resident Receiving Royalty Income

This is in reply to your letter of November 5, 1998, wherein you enquired whether a person who is resident for income tax purposes in Canada is liable to pay income tax on royalty, or royalty-like payments received from a non-Canadian based corporation. If yes, you enquired whether the Canadian resident recipient is liable for Canadian income tax on the whole amount of such payments or only on those sums actually remitted to the recipient in Canada.

All residents in Canada, including individuals and corporations, are taxable on their world income from all sources. Income for a taxation year would include royalty or similar types of payments received during the year. A Canadian resident taxpayer in receipt of foreign source income from which foreign taxes are withheld, may be entitled to a foreign tax credit that could reduce the Canadian income taxes otherwise payable.

We caution that our comments are general in nature and are not advance income tax rulings.

We trust our comments will be of assistance to you

Yours truly,

J .F Oulton, CA
for Director
Business and Publications Division
Income Tax Rulings and
Interpretations Directorate
Policy and Legislation Branch