In 2011-0427181E5 (released October 17, 2012), the CRA considered whether a non-resident company would be subject to withholding tax in Canada on a bundled “licence fee” payment from a company resident in Canada in respect of certain computer software rights. The licence fee comprised the following components: (1) a payment for the exclusive right to market and distribute custom computer software in Canada, (2) a payment for the right to sublicense to end-users in Canada the right to download and use the custom computer software, and (3) a payment for ongoing software upgrades and support of the custom computer software through the non-resident company’s website and telephone lines. The CRA confirmed that the payments in (1) and (2) would be exempt from 25% withholding tax in Canada under s. 212(1)(d)(iv), as “a royalty or similar payment on or in respect of a copyright in respect of the production or reproduction of any literary work”. In this respect, the decision in Syspro Software Ltd. v The Queen (2003 TCC 498) was cited as authority for a broad reading of this exemption: namely, as encompassing any right “connected with” the basic right to produce or reproduce the software – including the right to distribute. The CRA also confirmed that 15% withholding under Regulation 105 would not be required in respect of the services mentioned in component (3) because those services were not rendered in Canada.