In accordance with Regulation 1502 (f) (1) (B), the transfer of copyright shares in these programs is not taxable in the asset purchase agreement. Corporation A transferred the copyright of these programs to Corporation B, which allowed Corporation B to publish and distribute copies of these programs to third parties for compensation, and the transfer of copyright is not limited to copying programs for the internal use of Corporation B. In this case, the amounts paid by Corporation B for these copyrighted programs were not for website licenses or other end-use tax amounts that would not have been provided for in the tax regime under Regulation 1502 (f) (1) (B). (Note: Regulation 1502 has been amended so that, as of January 1, 2003, 50% of the levy will be taxable for optional software maintenance contracts. Prior to that date, 100 per cent of the tax was normally taxable.) In short, the Tribunal found that the classification of software as physical personal property does not depend on the dissociability of the program of the material medium on which it is registered, but on the view that the written program is a “tangible manifestation of intellectual property”. Assuming that the “repair” is done by providing a new hard drive or volume on which the “repaired” program or data file for which a fee is levied is recorded, both types of transactions are taxable. The tax applies for the same reason that it would apply to the sale of a hard drive or double volume on which a program or data file was recorded. It is simply a transfer of personal property, for a fee, and is a taxable sale. 120.0562 Technical assistance. Royalties for technical software assistance granted on a non-contractual basis, by tender, are not taxable, unless the physical personal property is transferred to the customer. 24.09.96. 120.0544 Software Maintenance Contract – Electronic Updates. Taxpayers have been granted software and software maintenance contracts to their customers.
Maintenance contracts are optional and are generally sold under 12-month conditions that are renewed each year, unless they are terminated by one of the parties. Currently, software updates contained in maintenance contracts are provided in a tangible form. New customers or renewals may require updates to be sent electronically. (3) The customer has obtained an annual license for a module and renews for an additional year. No additional tape or manual is sent to the customer, but an annual fee is levied. The client states that the additional costs are not taxable, as no additional physical property has been transferred. The issue of mandatory and optional fees for software maintenance contracts arises with respect to fees for telephone or on-site consulting services. If, at your choice, the purchaser can enter into consulting services at a price indicated separately, these optional fees are not taxable. If the customer does not have the option to purchase consulting services in addition to storage media, the fee is taxable as part of the sale of the storage media. 06.05.93. (Am.
2004-2). With respect to the electronic sale of software, the taxpayer can pass on documents to his clients in a concrete form. This documentation can be sent either on paper or on CD-ROM. The CD-ROM does not contain software such as a search engine that can access certain information on the hard drive. According to these facts, the transmission of software documentation (not the software itself) to its customers in the form of CD-ROMs or paper is subject to the imposition of separate fees to their customers for this documentation. If no royalty is levied, the taxpayer is the consumer of his documentary documents. 19.04.96. (Am. 2004-2). 120.0525 Payment of disputed royalties.
A customer purchased software products under a license that limited its use to a centralized processing unit.