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.
5-960371
XXXXXXXXXX A. St-Amour
Attention: XXXXXXXXXX
June 21, 1996
Dear Sirs,
Re: SR&ED carried on outside Canada
This is in response to your letter of January 11, 1996, asking whether or not you need to get approval from our Directorate to spend money with an institution abroad, in order to qualify for the SR&ED tax credit. We apologize for the delay in responding to your letter.
Subsection 37(2) of the Income Tax Act ("the Act") provides a deduction for current expenditures made by the taxpayer, in the year, in any of the following circumstances:
(a)on SR&ED carried on outside Canada if it is directly undertaken by or on behalf of the taxpayer and is related to the taxpayer's business, or
(b)payments made to an approved association, university, college, research institute or other similar institution to be used for SR&ED carried on outside Canada that is related to the taxpayer's business provided that the taxpayer is entitled to exploit the results of such SR&ED.
It is not necessary that you obtain our Directorate's approval to make a payment as described in (b) above. As mentioned in paragraph 11 of Interpretation Bulletin IT-151R4, the term "approved" as used in section 37 refers only to the approval of associations or other organizations. To determine whether an institution or association has been approved by the Minister for purpose of section 37, you should contact the organization in question.
It should be noted that the current expenditures referred to in subsection 37(2) of the Act do not qualify for the SR&ED investment tax credit. As stated in paragraph 46 of the bulletin, a "qualified expenditure" is defined in subsection 127(9) of the Act and includes both current and capital expenditures on SR&ED carried on in Canada. To be eligible as a "qualified expenditure", the expenditure must first qualify as an expenditure on SR&ED that is described in paragraph 37(1)(a) or subparagraph 37(1)(b)(i).
We have attached a copy of the relevant sections of the Act for your convenience. We trust the above comments will be of assistance to you. If you have any other questions do not hesitate to contact us.
Yours truly,
for Director
Financial Industries Division
Income Tax Rulings and
Interpretation Directorate
Policy and Legislative Branch
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© Her Majesty the Queen in Right of Canada, 1996
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© Sa Majesté la Reine du Chef du Canada, 1996
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