Please note that the following document, although believed to be correct at the time of issue, may not represent the current position of the CRA.
Prenez note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle de l'ARC.
Principal Issues: "Approved" status requested for the XXXXXXXXXX.
Position: Approval recommended.
Reasons: Information submitted meets the conditions for approval, as set out in SR&ED Third-Party Payments Policy which provides certain requirements to be met in respect of (a) SR&ED, (b) facilities and personnel (c) non-profit status (d) the public as beneficiary and (e) adequate funding for the SR&ED activities. These requirements are described in this letter.
XXXXXXXXXX
2013-050545
Charles Rafuse
613-247-9237
November 29, 2013
Dear XXXXXXXXXX:
Re: XXXXXXXXXX
This is in reply to your letter of September 12, 2013 in which you requested that the XXXXXXXXXX, which is a separate legal entity that is owned by the XXXXXXXXXX, be designated as an approved research institute for the purposes of clause 37(1)(a)(ii)(B) of the Income Tax Act ("Act").
The Minister's authority to grant or deny approval status is exercised pursuant to subsection 37(7) of the Act and is based on the information provided and representations made by the particular entity, its officers or directors and/or its authorized representatives. Changes in the organization or the activities carried on by the entity may affect its status as an approved entity. The requirements that must be met for an entity to receive approval status are more-fully described in the Canada Revenue Agency's "Third Party Approval Policy" which is available on our website.
Based on the information you submitted, and information contained on the XXXXXXXXXX, my understanding of the facts is as follows:
1. XXXXXXXXXX.
2. The XXXXXXXXXX was incorporated in XXXXXXXXXX as corporation without share capital by Letters Patent dated XXXXXXXXXX but has not been active since its incorporation.
3. XXXXXXXXXX.
4 On a going-forward basis, the XXXXXXXXXX will be the corporation that reflects the research enterprise of the XXXXXXXXXX and as such will be responsible for driving the commitment to research and discovery.
5. The XXXXXXXXXX's basic objects, as described in its Letters Patent, are to encourage the study and development of scientific research and experimental development by XXXXXXXXXX, by whatever means available.
6. Pursuant to the XXXXXXXXXX's Letters Patent, the XXXXXXXXXX's activities must be carried on without the purpose of gain for its members and any profits or other accretions to the corporation shall be used in promoting its objects and its directors must serve without remuneration and no director may receive any profit from his or her position. Directors may, however, be reimbursed for reasonable expenses incurred by them in the performance of their duties.
7. The XXXXXXXXXX does not, nor will it, own or control any other corporation or entity. Further, upon the dissolution of the XXXXXXXXXX and after payment of all debts and liabilities, any remaining property shall only be distributed, or disposed of, to one or more Canadian organizations referred to in clause 37(1)(a)(ii)(A), (B), (C) or (E) of the Act, whose objects are beneficial to the community and which carry on activities similar to those of the XXXXXXXXXX, to be used exclusively for scientific research and experimental development in Canada in accordance with the XXXXXXXXXX's by-laws.
8. You also maintain that the XXXXXXXXXX's only activities will unquestioningly fall within the meaning of "scientific research and experimental development" ("SR&ED"), as that term is defined in subsection 248(1) of the Act, and none of the SR&ED conducted by the XXXXXXXXXX, even when partnering with the industry or other third parties, is considered to be domain SR&ED restricted (in perpetuity) where the results may not be divulged to the general public. The results of any successful SR&ED undertaken by the XXXXXXXXXX will also be made available to benefit the general public.
9. The XXXXXXXXXX and the XXXXXXXXXX receives funding in the form of various federal and provincial grants as well as from various industrial and commercial third party contributors that fund specific SR&ED, totalling in the area of $XXXXXXXXXX annually. XXXXXXXXXX.
10. In order to ensure that all activities undertaken by XXXXXXXXXX will be eligible SR&ED activities, researchers will be interviewed to provide up-to-date information regarding their existing research accounts and research activity. In addition, applicants for new research accounts will be required to complete a form which will then be forwarded to a new Scientific Review Committee for review as part of the on-going process to review research projects to ensure SR&ED eligibility.
11. Currently, there are no staff employed by the XXXXXXXXXX; however, the XXXXXXXXXX's research staff will be employed by XXXXXXXXXX. There are approximately XXXXXXXXXX and staff currently funded through research accounts held at the XXXXXXXXXX; however, this number does not reflect the total number of XXXXXXXXXX and staff engaged in research or available to be engaged in research.
12. Research activities are integrated into the facilities of the XXXXXXXXXX which is located at XXXXXXXXXX. XXXXXXXXXX.
13. XXXXXXXXXX. Each basic science researcher is responsible for purchasing equipment for their research; however, there is also shared equipment for all researchers purchased by the XXXXXXXXXX. The XXXXXXXXXX will have access to research equipment owned by the XXXXXXXXXX and/or the XXXXXXXXXX.
Approval
Provided that the above statements constitute a complete and accurate disclosure of all of the relevant facts, and provided that the XXXXXXXXXX continues to operate on a not-for-profit basis for the purposes of performing SR&ED in Canada as described above, I am pleased to advise that, pursuant to the authority granted under subsection 37(7) of the Act, the Institute is hereby approved as an approved research institute for the purposes of clause 37(1)(a)(ii)(B) of the Act.
Yours sincerely,
Brian McCauley
Assistant Commissioner
Legislative Policy and Regulatory Affairs Branch
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