| ******** News Flash******
Copyright Board Freezes Private Copying Levies for 2003 and 2004 On December 12, 2003 the Copyright Board of Canada released their ruling on the private copying tariffs for 2003-2004. |
to see older out-of-date FAQ pages go here, or here, or here, or here
No, there is no tax, but yes, there is a levy (see the difference below).
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 CPCC 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 and the media to which it will apply. The levy can be set for a 1- or 2-year period. So far, all of the periods set and requested have been 2 years.
The first time the Copyright Board set the levy was December 17, 1999.
At least 25 countries, including most G-7 and European Union members, have introduced comparable regimes with respect to the private copying of sound recordings. Canada is one of the last to do so.
The USA is often held out as an example of a place where "this could never happen", but as far as I can tell, it has been law there since December 8, 1994. It is part of Title 17, section 1004, and if you go to:
you will find this paragraph:
(b) Digital Audio Recording Media. - The royalty payment due under section1003 for each digital audio recording medium imported into and distributed in the United States, or manufactured and distributed in the United States, shall be 3 percent of the transfer price. Only the first person to manufacture and distribute or import and distribute such medium shall be required to pay the royalty with respect to such medium.
Note, however, that in the US there is NO levy collected on "ordinary" CD-Rs When the legislation was last changed (in 1994/1995) CD-Rs were not seen as a media intended for copying music. There IS a levy applied to other digital media, such as DAT and CD-R Audio.
In a posting to news://alt.comp.periphs.cdr on Sat, 18 December 1999 19:25:25 +0100, Sybren <S.J.Hettinga@student.tudelft.nl> wrote the following (edited for length):
"We have this kind of thing here in the Netherlands since 1 September '99.
To clear some things up:
- the levy here is about 8¢ for "computer" CDR's and about 40¢ for "audio" CDR's.
- this levy makes it *legal* to copy audio CD's for personal use. Commercially selling copied audio CD's is still (obviously) illegal.
- the money goes to the Buma/Stemra (a sister organisation of the RIAA), and is redistributed to all registered artists according to their respective sales. So yes (for the cynics out there), even the most obscure artist out there really does get his money (as *all* record labels register the albums they release).
- The 40¢ for "audio" CDR's was derived from the current levies on audio tapes, MiniDisk's and DAT's.
- The 8¢ for "computer" CDR's was chosen because research showed that 1/5th of all "computer" CDR's ended up being used for the copying of audio CD's."
The simple answer is NO, but you can legally copy your friend's music CD for YOUR OWN use.
To paraphrase the introduction to an early Copyright Board ruling:
On March 19, 1998, Part VIII of the Copyright Act came into force. Until then, copying any sound recording for almost any purpose infringed copyright. Part VIII legalizes one such activity: copying of sound recordings of musical works onto recording media for the private use of the person who makes the copy.
It does not matter whether you own the original sound recording (on any medium), you can legally make a copy for your own private use.
To emphasize this point, endnote 4 of an early Copyright Board ruling says:
Note that the Copyright Act ONLY allows for copies to be made of "sound recordings of musical works". Nonmusical works, such as audio books or books-on-tape are NOT covered.
The wording of the Copyright Act gives rise to some very odd situations. In the 6 examples below, "commercial CD" means a commercially pressed CD that you would normally buy at a retail store.
The Copyright Board did not have a website until early December 1999, which is part of the reason for this page. You can find their website at http://www.cb-cda.gc.ca/.
The Copyright Board has been very cooperative and open. However, they do have a very small staff. Of the many players in this drama, they were the last to have a website, but you can find it now at http://www.cb-cda.gc.ca/.
I contacted the Copyright Board by phone in late 1998 and had a very informative conversation with Mr. Mario Bouchard, General Counsel to the Copyright Board. He was kind enough to send me the equivalent of a FAQ via email. I have formatted it in HTML and placed it on this website.
Any time I have asked a question of the Copyright Board, I have received a prompt answer.
It has been law since March 19, 1998.
The levy started December 17, 1999. The levy is set for a period of 1 or 2 years and the law enabling the levy allowed it to start January 1, 1999. The next possible change would be January 1, 2003.
The amount depends on the media in question, as shown in the following two tables. The levy is currently applied per unit. The length or size of the media does not matter (except for audio cassettes 40 minutes long or less, as shown below). Table 1 shows the current levy (2001-2002), the levy proposed by the CPCC for that same period prior to the Copyright Board ruling, and the original levy granted for 1999-2000.
Table 2 shows the levy proposed for 2003-2004 in the statement filed by the Canadian Private Copying Collective (CPCC) on February 11, 2002. Because the CPCC have proposed varying the levy depending on the capacity of the media and because they have proposed extending the levy to MP3 devices, the second table is longer. The current levy is shown in the second table to allow easy comparisons.
| Medium |
2001-2002 levy per unit |
2001-2002 levy per unit |
1999-2000 levy per unit |
|
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 |
| Medium |
2003-2004 levy |
2003-2004 levy |
2001-2002 levy |
| Audio cassettes 40 minutes or more in length | tbd | 60¢ each | 29¢ each |
| Audio cassettes less than 40 minutes long | tbd | ??? - see note | 0 - see note |
| CD-Rs and CD-RWs (100 megabytes or more in capacity) | tbd | 59¢ | 21¢ each |
| CD-R Audio, CD-RW Audio and MiniDisc | tbd | $1.23 | 77¢ each |
| Removable electronic memory card, removable flash memory storage medium of any type, or removable micro-hard drive | tbd | 0.8¢ per megabyte | not covered |
| DVD-R, DVD-RW, DVD+RW, DVD-RAM or any other type of recordable or rewritable DVD | tbd | $2.27 each | not covered |
| Non-removable electronic memory card or non-removable flash memory storage medium of any type incorporated into an MP3 player | tbd | 2.1¢ per megabyte | not covered |
| Non-removable hard drive incorporated into an MP3 player or similar device ... primarily to record and play music. | tbd | $21 per gigabyte | not covered |
| Microcassettes (commonly used in dictating machines) | tbd | ??? - see note | 0 - see note |
| Digital audio tapes (DATs) | tbd | ??? - see note | 0 - see note |
Note:The items marked with "???" were not specifically mentioned in the application for new levies. The items above with 0 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."
A simplified version of the process is as follows:
The statement of levies the CPCC proposes to collect for the years 2003 and 2004 was published in the Canada Gazette on Saturday, March 9, 2002. A PDF of the Canada Gazette notice is available on the Copyright Board website and is called the Private Copying Tariff, 2003-2004
The levy is set by the Copyright Board for a term of 1 or 2 years. The first levy period covered 1999-2000. The current levy is in effect for 2001-2002. In theory, the levy could change on January 1, 2003, but the Copyright Board has to hold hearings and issue a ruling first. Historically, the rulings have been issued in mid-December.
Hearings to consider the levies the CPCC proposes to collect for the years 2003-2004 will probably be held in the fall of 2002. Here is a calendar of events::
Note: There is a big difference between a formal written objection and written comments. See the next item for details.
You can do one of two things: file a formal written objection or submit written comments.
Formal written objections require a considerable amount of work and must follow the procedure outlined in the Private Copying Tariff, 2003-2004. The last day to file formal written objections with the Board is May 8, 2002
Written comments are just that - preferably an email which becomes part of the record of the hearing and will be considered by the Board in their ruling. The last day to file written comments is the day before "final arguments" begin (at the end of the hearings).
Note that the ONLY practical things you can object to are the proposed value of the levy or the media to which the levy applies. For example, the Board has ruled in the past that "Audio recording media that are clearly meant for purposes other than private copying are excluded."
The Copyright Board is bound by law to set a levy, they CANNOT change the legislation. This means it is pointless to:
Contacting the Copyright Board
First of all, make sure you don't get ripped off (see next item) by confused or shady retailers collecting "the tax" at the cash register.
With CD-Rs selling for as little as 50¢ each, the proposed 59¢ levy could significantly raise the price. The effect of this increase could take as long as a year to be seen because the current levy (21¢) applies to any CD-R media that is"purchased" prior to December 31, 2002. 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.
No levy is payable on any blank recording media that "is destined for export".
By law, no levy is payable on sales to a society, association or corporation that represents persons with a perceptual disability. There are no other exceptions. Note that a blind or deaf person purchasing CD-Rs in a retail store would be paying the levy because it is embedded in the price of the product.
Under certain terms and conditions, the CPCC may waive the levy on sales of some media to certain persons or organizations. These include
The waiver is NOT a legal requirement and it depends entirely on the goodwill of the CPCC. This waiver applies only to audiocassettes, CD-R Audio, CD-RW Audio and Mini-Discs. Those interested in finding out more about the terms and conditions of the waiver (known as the zero-rating scheme) should see the CPCC web site
If you are a manufacturer or importer, you can avoid the levy entirely on your products as long as you record some sound on the media before you sell it. The sound recorded on the media can even be erased. Clearly this is not an option for CD-Rs, but for devices that include a hard drive, simply recording a sound on the drive and then erasing it exempts the drive from the levy. This is because (as the legislation now stands) "blank audio recording medium means a recording medium, regardless of its material form, onto which a sound recording may be reproduced, that is of a kind ordinarily used by individual consumers for that purpose and on which no sounds have ever been fixed..."
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.)
If the proposed rates and media were accepted, it would produce some very high levies for devices like the Apple iPod or the Creative Nomad Jukebox.
The iPod has a 5 gigabyte hard drive and sells for $600. It would attract a $105 levy.
The Creative Nomad Jukebox has a 6 gigabyte hard drive and sells for $390. It would attract a $120 levy.
There are even larger capacity MP3 devices available (I could not find Canadian retail prices for the following products).
Note that US Title 17, section 1004, (see http://www4.law.cornell.edu/uscode/17/1004.html) states: "Notwithstanding paragraph (1) or (2), the amount of the royalty payment for each digital audio recording device shall not be less than $1 nor more than the royalty maximum. The royalty maximum shall be $8 per device, ..." Clearly these proposed rates are much higher than those provided in the US. It raises the thorny question of when a device become a recording medium.
Apple and Creative could avoid the (proposed) levy entirely if they shipped their products with some sounds recorded on the hard drives. The Copyright Board could also decide to disqualify such devices as recording media.
Rather than read the abstract below, go directly to the CPCC fact sheet page here and read their own words. You should also read the CPCC Preliminary Statement of Position which directly addresses many of these points.
Here is a quick summary of their position (please see BOTH the fact sheet and position paper for full details):
There are many references in the two papers to percentage use patterns, but there are no citations of the sources of these numbers.
Some of this information can be found on the CPCC fact sheet page and the CPCC Preliminary Statement of Position.
How the money is distributed is determined by the Copyright Board, which ruled for 2001-2002 that it should be distributed as follows:
Where (roughly speaking) an author is a songwriter, a performer is a musician or singer, and a "maker" is a record production company.
Performers and makers only qualify for payment if they are Canadian. However, authors qualify regardless of their nationality.
The amounts of money involved are unknown to me. I have asked the CPCC the following questions and will post the answers when I receive them.
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 CDR775. You cannot use regular CD-Rs in these recorders. For more info see:
At the last URL you will find this paragraph:
... CD-R Audio discs which are especially designed for use in these stand alone CD-Audio recorders ... Only special blank Audio CD's will work in this type of recorder, you cannot use ordinary CD-R or CD-RW media. This is because these Audio CD's are protected with Serial Copy Management System (SCMS) which prevents the CD from being duplicated.
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 other websites is provided for informational purposes only. The other websites all have their own disclaimers. The links to commercial sites are simply to provide examples of the equipment or media being discussed. I am not remunerated by anyone in any way for producing this page.
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