Canadian government settles tax dispute

Agrees not to collect $450 mil in TV license tax

TORONTO -- The Canadian government has backed down and agreed not to collect around $450 million in annual license fees from private broadcasters, cable and satellite TV operators as part of an out-of-court settlement.

The broadcasters deemed the $100 million that they annually pay Ottawa an illegal tax, and the Supreme Court of Canada was to hear their case on October 19.

The CRTC, Canada's TV regulator, stopped billing the broadcasters in 2006 when the legal challenge against the license fees was first made.

The late fees, now totaling $450 million, were instead held in escrow accounts.

Ottawa agreed to not collect those late-fees if the broadcasters agreed to a new regime to be introduced by the CRTC that would cap future fees at around $100 million a year.

Since 1997, Ottawa collected in all $910 million in fees from broadcasters that were paid into general coffers.

"The agreement represents a reasonable compromise for both sides. It resolves treatment of contested fees and reflects a fair fee regime going forward," Charlotte Bell, chair of the Canadian Association of Broadcasters, said in a statement.

She added a capped regime would make the license fee regime more predictable for broadcasters.