I find this to be a bunch of bullsh*t, I wasted $40 bucks on this shit, now I can only buy music and movies, I should have stuck to using a credit card.
Yes, it's unfortunate, but it's been that way from day one. Apple say it's something to do with the way Canadian tax laws work regarding software or something like that. I don't understand it and think it's idiotic, but there's not a lot that can be done. This is why I opened up a US account. (Well, I opened up a US account to use codes, but it's been handy to have my account filled by someone on the US and use that to purchase apps, too.) I do use a CC on my Canadian account, but I prefer sticking to the US because using both accounts results in some annoying update behaviour having to switch accounts to update apps purchased on that one account.
I got screwed too, it's in the really, really fine print, written very small. It doesn't say anywhere else that it can't be used for apps, seems kinda shady to me, I ended up buying 50$ worth of music that I already own just for the sake of supporting the artists. This is not the first thread on this and it won't be the last, just another case of customers getting screwed because they didn't read the fine prints, thanks Apple
this happened to me as well when I first bought mine - I ended up buying Gord Downie's second album Battle of the Nudes, as well as 5 movies for my iPod. What a bummer it was when I figured it out though