25 June 1993 Income Tax Severed Letter 9307055 - Approved Institute

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.

Please note that the following document, although believed to be correct at the time of issue, may not represent the current position of the Department. Prenez note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle du ministère.

                                               930705
XXXXXXXXXX                                     C.R. Brown
                                               (613) 957-8954

Attention: XXXXXXXXXX

June 25, 1993

Dear Sirs:

This is in reply to your facsimile transmission of March 10, 1993 concerning approved organizations and scientific research and experimental development expenditures. We apologize for the delay in replying to your request.

As discussed with Mr. Brown by telephone June 23, 1993 the Rulings Directorate does not provide written comments on transactions and arrangements which are already in place. The local District Taxation Office has this responsibility.

However, as mentioned in the telephone call, we are prepared to offer some general comments. If on the basis of the facts and arrangements it can be demonstrated that a business person has arranged to have an amount deducted from a payment due from the sale of a product and such amount deducted is subsequently sent to another party to perform scientific research and experimental development related to the person's business, that amount may, notwithstanding the indirect manner of payment, qualify as an expenditure on scientific research and experimental development. To be deductible, the business person would be expected to have a measure of direction or control over the research carried out and be entitled to exploit the results of the research so financed. It would also have to be clear that no other person (for example the person redirecting the payment) can make a similar claim in respect of the same amount.

The above comments are an opinion only and are not binding on the Department.

Yours truly,

for Director Manufacturing Industries, Partnerships and Trusts Division Rulings Directorate