CMP.WERNER@UTEXAS-20.ARPA (Werner Uhrig) (04/11/85)
QUIRKS OF CANADIAN CUSTOM-DUTIES ON COMPUTER SOFTWARE
According to a letter in REMARK of April 1985, page 7, Canadian customs
distinguish between "applications" and "operating systems" software. I quote:
Canada Customs divides software into the categories of operating system
software and applications software. OS software is considered to be an
integral part of the computer and is, therefore, considered as hardware, which
attracts both duty and federal sales tax. This duty and sales tax is paid on
the TOTAL PURCHASE PRICE of the software.
NO DUTY is paid on applications software. Federal sales tax is payable, but
ONLY on the value of the physical medium on which the program is recorded.
Of course, to take advantage of this distinction, you must provide sufficient
information on the shipping invoice, and probably bring the Canada Custom
officer's attention to his department's policy in this regard, which is set out
in Revenue Canada Memorandum D13-11-2.
[An example of] what the invoice should also say is thlications software,
recorded on 5-1/4" diskette magnetic medium, the medium itself having a value
of $X".
The practical effect of this, of course, is that the recipient pays 10% of
next to nothing, and that customs might not even bother to collect the few
cents.
The same applies to software recorded on a ROM-chip. Incidentally, disk
drives, power supplies and cabinets, imported into Canada by themselves, and
not as part of a computer, attract federal sales tax, but NOT duty, which is
generally 3.9% for computer equipment that is subject to duty.
Direct any questions and request to the Minister of Revenue Canada,
The Honourable Perrin Beatty,
Minister, Revenue Canada - Customs and Excise
Connaught Building, McKenzie Avenue
Ottawa, Ontario, K1A OL5
[ any thanks for bringing this useful information to our attention goes to:
Jim Shantora,
Barrister, Solicitor, Notary Public,
109 Silversted Drive
Agincourt, Ontario M1S 3G4
Note also, that REMARK is the Official Magazine for users of Heath/Zenith
computer equipment and your local HUG - Heath Users Group - or Zenith-dealer
should have a copy for review. --- Werner ]
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