OLD VERSION of the Canadian copyright levy
on blank audio recording media
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Contents:
I have heard rumours that the Canadian Government is taxing blank CD-RS - is this true? (modified 2000-12-17)No, there is no tax, but yes, there is a levy (see the difference below). In mid 1998, a series of wild rumours began circulating about the proposed levy to be placed on blank audio recording media. Dozens of people on news://ott.forsale.computing and news://alt.comp.periphs.cdr suggested that starting January 1, 1999, the price of blank CD-RS would increase by $2.50 each. Since such media was selling at that time for as little as $1.70 per disk (retail), a $2.50 increase, if it had taken place, would have more than doubled the cost of CD-Rs. Note that as of 2000-12-17 it is possible to buy CD-RS for as little as $0.50 each (retail). Prices quoted here are in Canadian dollars and generally exclude any taxes (such as GST, HST, QST, RST). These rumours, some of which were repeated by otherwise reputable news outlets, resulted in "runs" on any retailer (Costco/Price Club was often cited) with CD-RS at a reasonable price. In some cases it individuals bought entire skid loads (1000s) of CD-RS at one time. The rumours also caused some sellers to attempt to gouge customers based on the supposed shortage. One persistent poster on news://ott.forsale.computing offered CD-RS at $8.00 each, despite the fact that there were lots of CD-RS available (although not necessarily all brands) at an average price of $2.00. What is a levy? (modified 2000-12-17)On March 19, 1998, new federal copyright legislation came into force. Among other things, the legislation provides for a levy to be collected on blank audio recording media. It is called a levy (and not a tax) because it is not collected by any level of government, it is collected by a group representing the recording industry. In a letter to the Copyright Board of Canada released Monday, January 18, 1999, the five collectives that filed tariffs for a proposed levy on blank audio recording media announced the creation of the Canadian Private Copying Collective (CPCC). The Copyright Board decides on the amount of the levy and what media it applies to. The recording industry submits its proposed levies and the Copyright Board holds hearings to hear any objections to the proposed levy amounts. Note that the Copyright Board CANNOT change the law, they can only determine the levy value. The levy can be changed every 2 years. The first time the Copyright Board set the levy was December 17, 1999. The law allowed their ruling to be retroactive to January 1, 1999. However, the CPCC letter mentioned above advised the Copyright Board that all members of the CPCC agreed to delay collecting the levy on blank audio recording media until the Board rendered its decision on the proposed levy or until December 31, 1999, whichever was earlier. So the levy started on December 17, 1999. What other countries collect a levy
like this?
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| Medium |
2001-2002 levy per unit |
2001-2002 levy per unit |
1999-2000 levy per unit |
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Audio cassettes over 90 minutes in length |
29¢ | $1.00 | 23.3¢ |
| Audio cassettes over 60 minutes in length and up to and including 90 minutes in length | 29¢ | 75¢ | 23.3¢ |
| Audio cassettes from 40 minutes up to and including 60 minutes in length | 29¢ | 50¢ | 23.3¢ |
| Audio cassettes 40 minutes long or less | 0 - see note | ??? - see note | 0 - see note |
| CD-R Audio, CD-RW Audio and MiniDisc | 77¢ | $1.75 | 60.8¢ |
| CD-RS and CD-RWs | 21¢ | 50¢ | 5.2¢ |
| Microcassettes (commonly used in dictating machines) | 0 - see note | ??? - see note | 0 - see note |
| Digital audio tapes (DATs) | 0 - see note | ??? - see note | 0 - see note |
Note:
The items marked with "???" were not specifically mentioned in the application for new levies. The items above with no levy are excluded because the Copyright Board says "Audio recording media that are clearly meant for purposes other than private copying are excluded. A case in point are microcassettes commonly used in dictating machines. Digital audio tapes are another, as for all practical purposes, they are used by professionals, not by individual consumers."
The levy is set by the Copyright Board for a term of 2 years. The first levy period covered 1999 and 2000. The new levy will be in effect for 2001 and 2002. In theory, the levy could change on January 1, 2003, but the "collectives" have to propose new rates and the Board has to hold new hearings.
Hearings to consider the levies the Canadian Private Copying Collective proposes to collect for the years 2001 and 2002 concluded on November 28, 2000. The hearings took 7 days. The Copyright Board hopes to issued its ruling December 15, 2000. The detailed reasons for approving the new levies will be published in January 2001.
It is now too late to object. You had to file written comments before the date was set for hearing final arguments. Any person who wished to object to the statement had to file written objections with the Board within 60 days of the publication of the notice, that is, no later than May 17, 2000. You HAD TO follow the instructions provided on the Copyright Board website in order to be considered a formal objector.
Note that the ONLY practical thing you can object to is the proposed value of the levy. The Copyright Board is bound by law to set a levy, they CANNOT change the legislation. This means it is pointless to:
With CD-R media selling for as little as 50¢ per unit, the new 21¢ levy on CD-RS has the potential to significantly raise the price of this media. The effect of this increase could take as long as a year to be seen because the old levy (5.2¢) applies to any CD-R media that was "purchased" prior to December 31, 2000. Note that a retailer or distributor can "purchase" the media before the change date, specifying that it be delivered after the change date. So, in theory, big retailers could place huge orders to avoid the new, higher levy for a while.
If you buy any blank recording media outside Canada and use it yourself they will not be subject to the levy. Why? Because YOU are the importer and you are not selling blank media. It is the sale of blank media by the importer or manufacturer that triggers the levy.
More importantly, make sure you don't get ripped off by confused or shady retailers collecting "the tax".
By law, no levy is payable on sales to associations representing persons with perceptual disabilities. There are no other exceptions.
There are several groups that will not have to pay the levy by agreement with the CPCC. These include:
The accurate description is that the levy for them is zero-rated, but enough of that. This is NOT a legal requirement and so depends on the goodwill of the CPCC. Those interested in finding out more about this so-called zero-rating scheme may contact CPCC at telephone (416) 486-6832 or facsimile (416) 485-4373.
Remember that the levy is applied ONLY when a manufacturer or importer sells the blank audio recording media.
Some retailers may try to take advantage of the artificial shortage cased by panic buying to raise their prices. None of the price rise will be passed on to the intended beneficiaries of the levy (recording artists, etc.).
Some retailers mistakenly believe that they need to raise their prices to collect the levy. However, the levy is not applied at the retail level, it is applied to importers and manufacturers. None of this "just-in-case" retail price rise will be owed to or passed on to the intended beneficiaries of the levy (recording artists, etc.). The retailers will pocket it all. (Note that a special case exists where the retailer is directly importing the media, because they are both the importer and the retailer.)
There are special CD-RS called "blank audio CDs" made for use in home recording units that allow the users to copy audio CDs. These are referred to as "CD-R Audio" by the Copyright Board. They attract a levy of 77¢ each.
These CD-RS include a specially embossed section on the disk that is read by "consumer" CD recorders such as the Phillips CDR560S. You cannot use regular CD-RS in these recorders. For more info see:
At the last URL you will find this paragraph:
Kodak audio discs carry a special ATIP code that identifies the disc as compatible with audio CD recorders. To protect the copyright of professional artists and music publishers, the CD recorders also contain a Serial Copy Management System (SCMS) code that allows users to record only from an original pre-recorded CD, preventing them from making copies of a custom-recorded CD.
Neil Herber works for Eton Systems, a technical publishing company that creates, writes, edits, and publishes reference and marketing material for clients in the high-tech, scientific, and engineering communities. More details are available on the Eton Systems corporate website.
IMPORTANT NOTE FROM NEIL HERBER: I am not a lawyer, but I have discussed most of the points I make here with a lawyer. You should not rely on any of this material for making business decisions of any type. Consult with your legal advisor. Material from government websites is provided for informational purposes only. The government websites all have their own disclaimers.