| 19(1) | File No. 5-8455 |
| S. Leung | |
| (613) 957-2116 |
September 7, 1989
Dear Sirs:
Re: Transfer of Registered Industrial Designs
This is in reply to your letter of July 31, 1989 wherein you requested our confirmation that payments by a Canadian resident for the outright purchase from a non-resident of a registered industrial design would not be subject to withholding tax under subparagraph 212(1)(d)(i) of the Income Tax Act (the "Act").
Since we have not seen a copy of the relevant agreement, we can reply in general terms only.
In our general view, provided that:
(1) the registered industrial design is assignable and transferable pursuant to the laws of the country where it was registered;
(2) the transfer is an outright purchase whereby the transferee will have absolute ownership of the design (that is, having equitable and legal title to the design) and the transferor will not have any right to use the design after the transfer; and
(3) the payments are not dependent upon the use of or production from the design,
subparagraph 212(1)(d)(i) of the Act would not apply to the payments for the outright purchase of a registered industrial design by a Canadian resident from a non-resident vendor.
The foregoing comments are not rulings and in accordance with the guidelines explained in Information Circular 70-6R, are not binding on the Department.
Yours truly,
for DirectorReorganizations and Non-Resident DivisionSpecialty Rulings DirectorateLegislative and IntergovernmentalAffairs Branch