1 October 1997 External T.I. 9724295 - APPLICATION FOR AN APPROVED RESEARCH 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.

Principales Questions:

application for an approved research institute

Position Adoptée:

list of criterias

Raisons POUR POSITION ADOPTÉE:

ccm 972334 and 972318

				5-972429
XXXXXXXXXX		J. Desparois

Attention: XXXXXXXXXX

October 1, 1997

Dear Sirs/Madams:

Re: Application for an "Approved Research Institute"

This is in reply to your facsimile transmission dated September 11, 1997 in which you requested that we provide you with the requirements that are necessary in order for the organization (the "Organization") to be considered as an "approved research institute" for purposes of clauses 37(1)(a)(ii)(A) and/or (B) of the Income Tax Act (the "Act").

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

1.The Organization, 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 the Organization to become an approved research institute, it must meet the criteria of a non-profit organization and be able to demonstrate that it is able to carry out scientific research and experimental development (SR&ED) in Canada on an ongoing basis. More specifically, the Organization must meet all of 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; and

(e)the funding of the Organization 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 the following documentation and information relating to the Organization and its activities:

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

(b)copies of the Organization's charter, code of ethics and by-laws;

(c)details of the research activities to be carried out by the Organization in the future and evidence that it has the staff and facilities to carry out such activities;

(d)a detailed description of the Organization's arrangements for obtaining and disbursing funds;

(e)a list of the premises occupied by the Organization and a copy, if any, of any lease of premises;

(f)a list of researchers' names and qualifications;

(g)a list of the equipments that will be used by the Organization;

(h)financial statements for prior years and budgets for future years;

(i)information concerning the ownership of the results of the research;

(j)explanation of how the general public would be a beneficiary of the results of any successful research;

(k)a confirmation that all projects undertaken by the Organization will not include activities described in paragraphs 2900(1)(e) to (k) of the Income Tax Regulations, which are activities with respect to

(e) market research or sales promotion;

(f)quality control or routine testing of materials, devices or products;

(g)research in the social sciences or the humanities;

(h)prospecting, exploring or drilling for or producing minerals, petroleum or natural gas;

(i)the commercial production of a new or improved material, device or product or the commercial use of a new or improved process;

(j)style changes; or

(k)routine data collection.

The terms "association" and "organization" used above include a corporation. We hope that you will find the foregoing comments helpful. Should you require any additional information please do not hesitate to contact us.

Yours truly,

Marc Vanasse, CA
for Director
Resources, Partnerships and Trusts Division
Income Tax Rulings and Interpretations Directorate
Policy and Legislation Branch