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.
XXXXXXXXXX
Attention: XXXXXXXXXX
Dear Sirs:
This is in reply to your letter dated February 3, 1993, whereby you requested a technical interpretation with respect to subparagraph 37(1)(a)(ii) of the Income Tax Act (the "Act"). We apologize for the delay in responding to your request.
In the fact situation presented in your letter, Co A will have to determine the percentage of expenditures made by Co B inside Canada, pursuant to their agreement, for purposes of subsection 37(1) of the Act. To be deductible under this subsection, a payment has to be made to an institution referred to therein, and "to be used for scientific research and experimental development carried on in Canada and related to a business of the taxpayer". Expenditures carried on outside Canada must meet the requirements of subsection 37(2) of the Act. In both cases, this is independent of whether or not there exists an arm's length relationship between the payer and the payee.
We trust that these comments will be of some assistance.
Yours truly,
for Director Manufacturing Industries, Partnerships and Trusts DivisionRulings DirectorateLegislative and Intergovernmental Affairs Branch
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© Her Majesty the Queen in Right of Canada, 1993
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© Sa Majesté la Reine du Chef du Canada, 1993
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