royalties

Thurlow, C.J. stated (p. 6275) that "'royalties' ... connotes a payment calculated by reference to the use or to the production or revenue or profits from the use of the rights granted" and that "neither 'rentals' nor 'royalties', in the ordinary connotation ...

The non-resident taxpayer, a film distributor, which had acquired from another film distributor the distributorship rights for certain films, agreed in consideration for a lump-sum payment to supply copies of those films to the CBC and to grant it for the same period of time the exclusive right to show them on its French-language television network.

Dumoulin J. stated (p. 1341):

"I incline to believe that a lump-sum payment for rights irrevocably ceded, tantamount to an assignment in perpetuity ... can hardly be reconciled with the customarily accepted notion attaching to 'rent or royalties', id est: limit of time, retention of a 'jus in re' by the lessor, and periodical rentals by the lessee, either for fixed sums or an apportionment of receipts."

Under the Road Allowances Crown Oil Act (Alberta), 1.88% of producing oil reservoirs of the taxpayer was deemed to be property of the Alberta Crown; and the taxpayer was accorded the right to sell its entire oil production from the reservoirs, including the Province's 1.88% share, upon paying the Province 1% of the total value of the production.

In finding that such payments were "royalties", Sharlow J.A. stated (at p. 5673) that:

The taxpayer, which assigned its franchise to supply municipalities with natural gas to another company in consideration for amounts (described in the assignment as "royalties") which were stipulated percentages of the revenues derived by the assignee from sales of gas, was held to receive the royalties as income pursuant to s. 3(1)(f) of the Income War Tax Act, which provided for the inclusion of "rents, royalties, annuities or other like periodical receipts which depend upon the production or use of any real or personal property".