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.
MINISTER/DM'S OFFICE YS # 93-4153T ADM'S OFFICE CENTRAL RECORDS RETURN TO RULINGS, ROOM 303, MET. BLDG. AUTHOROF CORPORATE CASE FILE
September 2, 1993
XXXXXXXXXX
Dear XXXXXXXXXX
I am responding to your letter of June 14, 1993, addressed to the Honourable Otto Jelinek, former Minister of National Revenue, regarding the investment tax credit (ITC) XXXXXXXXXX for scientific research and experimental development (SR&ED). A copy of your letter was sent to Mr. Jelinek by the Honourable Tom Hockin. I apologize for the delay in replying.
Due to the confidentiality provisions of the Income Tax Act, I am unable to discuss the income tax affairs of your client with you without proper authorization. However, I trust the following comments will be helpful to you.
In order that an SR&ED expenditure be considered a "qualified expenditure" under the Act and, therefore, eligible for the ITC, the expenditure, among other things, must meet the requirements for deduction under paragraph 37(1)(a) of the Act.
The Act provides that where a payment is made by a taxpayer to a third party for SR&ED, the payer must be entitled to exploit the results of the SR&ED carried on by the third party. However, since a true gift must be a voluntary transfer of property as a result of which no consideration, right, privilege, benefit or advantage of any kind accrues to the donor, this provision essentially prevents a true gift from being eligible for deduction under section 37.
I would like to thank you for writing and bringing your concerns to our attention.
Yours sincerely,Pierre Gravelle, Q.C.
c.c. The Honourable Tom Hockin, P.C., M.P.
London District Taxation Office
F.B. Fontaine
957-2131
931824
August 30, 1993
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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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