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.
Decision Summary
Scientific Research Section
Subject: Legal opinion dated November 15, 1985
Unreasonable R & D Expenditures
Reference: 67, 245(1), 37(1) and 194(2)
Issue: Do 67 and 245(1) apply to 37(1)(a) and 37(1)(b) amounts
claimed as a Part VIII refund under 194(2)?
- 67 and 245(1) apply in computing income to disallow an otherwise deductible deduction. We asked for a legal opinion clarifying whether these two sections apply to disallow an excessive or inflated scientific research expenditure that is claimed as a Part VIII tax refund in computing the Refundable Part VIII tax on hand. We had also asked for clarification whether the "wholly attributable to the prosecution of scientific research" rule of 37(7)(c) by itself provides us sufficient authority to disallow excessive or inflated scientific research expenditures claimed under Part VIII.
Decision: To accept the legal opinion that 67 and 245(1) apply to R
& D expenditures claimed as a Part VIII refund as defined
in 194(2). The expenditure must first be deductible
under 37(1)(a) or (b) before it can be renounced under
194(2). To accept the legal opinion that 37(7)(c) can be
relied on to disallow excessive or inflated scientific
research expenditures.
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