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.
PRINCIPAL ISSUES: Are amounts received from Technology partnerships (industry Canada) by T\P to be considered loan or asssistance?
POSITION: assistance
REASONS: Finance position and wording of document
June 3, 1998
Audit Directorate
Specialized Compliance Partnerships Section
Enhancement Division S.J. Tevlin
Tax Incentive Audit Section
Attention: Louise Green
981255
Assistance for SR&ED - Subsection 127(9)
We are writing in response to your memorandum dated May 13, 1998 wherein you requested our opinion as to whether the “Technology Partnerships Canada Contribution Agreement” (the “Agreement”) constitutes an agreement to provide “government assistance” or is a loan agreement which will not affect the calculation of the investment tax credit.
We have reviewed the Agreement and the comments provided in your memorandum, and in this regard we offer the following comments:
We concur with your position that the “contribution” by Technology Partnerships Canada, pursuant to the Agreement, should be considered government assistance and not a loan.
In support of this position we refer you to the decision in Radio Engineering Products Limited v M.N.R., 73 DTC 5071. The appellant company was engaged in the design and development of certain communications equipment. The Department of Defence Production entered into a contract with the appellant by virtue of which it undertook to contribute up to $450,000 towards the cost of the project. The Federal court held that the character of the payment of the $450,000 was that of a contribution towards the costs of the project, and although there were provisions for repayment and contingencies, it was not a loan or an advance in the nature of a loan of capital or a payment on capital account.
We trust our comments will be of assistance to you.
for Director
Resources, Partnerships and
Trusts Division
Income Tax Rulings and
Interpretations Directorate
Policy and Legislation Branch
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