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.
Dear Sirs:
Re: Paragraphs 37(1)(b) and 37(7)(c) of the Income Tax Act (the"Act")
This is in reply to your letter dated April 4, 1991 in which you requested our view as to whether certain expenditures incurred by a corporate taxpayer for the construction of a processing facility will be considered to be for scientific research and experimental development ("SR & ED") pursuant to paragraph 37(1)(b) of the Act.
The question of whether any capital expenditure incurred in the construction of a particular facility is deductible for SR & ED purposes would depend on whether or not such expenditure was incurred for (and was all or substantially all attributable to) the provision of premises facilities or equipment for the prosecution of SR & ED in Canada. We can only refer you to the comments in Interpretation Bulletin IT-151R3 and Information Circular 86-4R2 as each determination of this nature is a question of fact and all the guidance of an interpretive nature we can provide on this subject is contained in these documents. However, your local District Taxation Office may be able to provide further comments on the application of the principles described in the Bulletin and the Circular to your particular situation.
You also requested that we provide any guidelines that would be applied when assessing a situation described in paragraph 7.9 of Information Circular 86-4R2. In this regard we enclose an extract from a letter concerning "dual-purpose prototypes". The treatment described in respect of such prototypes will generally be applicable to commercial scale pilot plants.
We regret that our comments are rather limited but, as stated in paragraph 8.3 of Information Circular 86-4R2, advance rulings are not provided on these matters.
Yours truly,
for DirectorBusiness and General DivisionRulings DirectorateLegislative and Intergovernmental Affairs Branch
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© Her Majesty the Queen in Right of Canada, 1991
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© Sa Majesté la Reine du Chef du Canada, 1991
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