19 March 1996 External T.I. 9527845 - APPROVED ASSOCIATION

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.

XXXXXXXXXX 952784

Attention: XXXXXXXXXX

March 19, 1996

Dear Sirs:

Re: Application for "Approved Association" Status

This is in reply to your letter dated October 13, 1995, in which you requested that the XXXXXXXXXX be recognized as an "approved association" for the purpose of the scientific research and experimental development ("SR&ED") tax incentives under the Income Tax Act (the "Act") and the Regulations thereto. We regret the delay in responding to your enquiry.

In order that an association or organization may obtain "approved" status, it is necessary that certain information and documents in respect of the association be submitted to this Department for consideration and approval. The terms "association" or "organization" used below include a corporation.

The requirements in respect of the application for, and the granting of, such approved status are described as follows:

1.An association, in order to be considered "approved" for the purposes of section 37 of the Act, must receive written approval from our Minister.

2.In order for an organization to become an approved association, it must meet the criteria of a non-profit organization and be able to demonstrate that it is able to carry out SR&ED in Canada on an ongoing basis. More specifically, the organization must meet all the following requirements:

(a)It must have the facilities and personnel capable of carrying out SR&ED as defined in the Act.

(b)It must carry on only activities that are unquestionably SR&ED.

(c)It must satisfy the requirements for non-profit status; such as, no personal benefit to its members, no control of other associations, satisfactory provisions for distribution of assets upon dissolution, etc.

(d)The general public must be a beneficiary of the results of any successful research.

(e)The funding of the association must be sufficient to ensure ongoing SR&ED.

3.There is no charge by our Department to approve an association. However, in order to do so, we would require copies of the following documentation relating to the organization and its activities:

(a)identification of the legislation under which the association was created;

(b)copies of the organization's charter, code of ethics and by-laws which should indicate (i) that the organization does satisfy all requirements described in clause 37(1)(a)(ii)(A) of the Act and the post-amble thereto, and (ii) how its property will be distributed in the event of a wind-up;

(c)a detailed description of the association's arrangements for obtaining funds;

(d)a detailed description of the association's arrangements for disbursing funds;

(e)financial statements for prior years; and

(f)details of the research activities to be carried out by the association in the future and evidence that it has the staff and facilities to carry out such activities.

We hope the above comments have outlined satisfactorily the requirements for obtaining "approved" status for the purposes of section 37 of the Act. Should you require any additional information, do not hesitate to contact us.

Yours truly,

for Director
Manufacturing Industries, Partnerships
and Trusts Division
Income Tax Rulings and Interpretations Directorate
Policy and Legislation Branch