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: requirements for approved status under 37(1)(a)(ii)(A)
Position: must be non-profit and be able to carry out SR&ED in Canada on on-going basis.
Reasons: legislation and policy
990024
XXXXXXXXXX B.G. Dodd
(613) 957-8953
Attention: XXXXXXXXXX
January 14, 1999
Dear Sirs:
Re: Approved Association Status
We are writing in reply to your facsimile transmission of December 31, 1998 concerning approved status under section 37 of the Income Tax Act (the “Act”) in respect of the XXXXXXXXXX.
The general requirements for obtaining approval of an association for purposes of clause 37(1)(a)(ii)(A) of the Act are that the association must meet the criteria of a non-profit organization and must 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 the following requirements:
1. It must have the facilities and personnel capable of carrying out SR&ED as defined in the Act.
2. It must carry on only activities that are unquestionably SR&ED.
3. In order to satisfy the requirements for non-profit status, there must be no personal benefit to its members, no control of other associations, satisfactory provisions for distribution of assets upon dissolution, etc.
4. The general public must be a beneficiary of the results of any successful research.
5. The funding of the association must be sufficient to ensure ongoing SR&ED.
In support of a request for such approval, copies of the following documentation relating to the organization and its activities should be submitted to this Directorate:
- identification of the legislation under which the association was created;
- copies of the organization's charter, code of ethics and by-laws which should indicate: (1) - that the organization does satisfy all requirements described in clause 37(1)(a)(ii)(A) of the Act and the post-amble thereto, and (2) - how its property will be distributed in the event of a wind-up;
- a detailed description of the association's arrangements for obtaining funds;
- a detailed description of the association's arrangements for disbursing funds;
- financial statements for prior years; and
- 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 forgoing will be of assistance.
Yours truly,
for Director
Resources, Partnerships and Trusts Division
Income Tax Rulings and Interpretations Directorate
Policy and Legislation Branch
.../cont’d
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