Apple Computer has announced it will refund the "piracy tax" the Canadian government put on every iPod sold in the country.

Although the Canadian Supreme Court declined to hear a challenge to a lower-court ruling that the tax -- a levy put on all recordable blank media, such as tapes and CDs, to compensate the music industry for piracy -- was unlawful, the levy had affected new iPod buyers for more than a year.

Apple said it will be refunding the levy, which was first introduced in 2003, to its Canadian customers shortly.

The company said in a statement: "Apple is pleased that the Supreme Court of Canada let stand a lower court ruling that blank media levies on iPods are invalid and will shortly announce a claims process so customers can request a refund for the levies they paid."

The Canadian government taxed the iPod buyers US$2 for storage up to 1GB, US$15 for 10GB or less, and US$25 for more than 10GB -- leaving mini iPod owners with US$15 less in their pockets, while full-size iPods saw US$25 added to their price tags.

The rights-holders organisation that receives the royalties from sales of blank media, the Canadian Private Copying Collective (CPCC), made US$4 million from the levies placed on iPods and other MP3 players.

The monies generated by sales of the iPod will now be returned to Apple.

Silicon.com's Jo Best reported from London. For more coverage from Silicon.com, click here.