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: Request for approved status as an “eligible research institute” under clause (c) of that definition in subsection 97(27) of the Taxation Act, 2007, S.O. 2007, c. 11, Sched. A.
Position: The corporation appears to meet the conditions required to be an ERI under subsection 97(27) of the TA as of April 10, 2024.
Reasons: The conditions listed in paragraph 2 of subsection 38(7) of Regulation 37/09 of the TA appear to be satisfied.
XXXXXXXXXX 2024-101372
Steven Pannozzi, MTAX
June 18, 2024
Dear XXXXXXXXXX:
Re: Application for Designation as an Eligible Research Institute
This is in reply to your correspondence of April 8, 2024 to the Income Tax Rulings Directorate wherein you requested that XXXXXXXXXX be designated as an Eligible Research Institute (“ERI”) under clause (c) of the definition of that term in subsection 97(27) of the Taxation Act, 2007, S.O. 2007, c. 11, Sched. A (“the Taxation Act”) and for purposes of the Ontario Business Research Institute Tax Credit.
The authority to grant or deny this designation is exercised pursuant to subsections 38(11) and 38(12) of Ontario Regulation 37/09 under the Taxation Act. Where a collection agreement is in effect, The Minister of National Revenue may exercise the powers and duties of the Ontario Minister of Finance pursuant to subsection 161(3) of the Taxation Act. Where the designation is granted, the decision 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 ERI.
Based on the information you submitted our understanding of the facts is as follows:
1. XXXXXXXXXX is a non-profit organization (“NPO”) incorporated without share capital under the Canada Not-for-profit Corporations Act on December 14, 2022.
2. The Articles of Incorporation of XXXXXXXXXX require XXXXXXXXXX to operate in a manner which will allow XXXXXXXXXX to maintain the status of a non-profit SR&ED corporation under paragraph 149(1)(j) of the federal Income Tax Act.
3. Membership conditions for XXXXXXXXXX are provided in subsection 2.01 of the amended and revised by-laws of XXXXXXXXXX dated April 10, 2024 as follows:
XXXXXXXXXX
4. Subsection 5.01 of the original and amended by-laws states:
“5.01 ELECTION AND TERM
XXXXXXXXXX
5. Section 10 (Expenditures on account of scientific and experimental development) of the amended by-laws requires the following:
“10.01 AUTHORIZED PAYMENTS
XXXXXXXXXX
Provided that the above statements constitute a complete and accurate disclosure of all of the relevant facts, and provided that XXXXXXXXXX continues to operate as a corporation for scientific research and experimental development in accordance with paragraph 149(1)(j) of the federal Income Tax Act, XXXXXXXXXX is hereby granted the designation of ERI under subsections 38(11) and 38(12) of Regulation 37/09 of the Taxation Act for the purposes of clause (c) of the definition of that term in subsection 97(27) of the Taxation Act, effective April 10, 2024.
Yours sincerely,
Soren Halverson
Assistant Commissioner
Legislative Policy and Regulatory Affairs Branch
Canada Revenue Agency
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