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.
DM'S OFFICE (2) 96-05792M
ASSOCIATE DEPUTY MINISTER(1)
ADM'S OFFICE(3)
RETURN TO 15TH FLOOR, ALBION TOWER
PENDING COPY
XXXXXXXXXX
Dear XXXXXXXXXX:
Thank you for your letter of July 23, 1996, concerning the scientific research and experimental development (SR&ED) tax credits claimed by XXXXXXXXXX.
In your letter, you express concern that the Department does not consider XXXXXXXXXX to be a Canadian corporation and has disallowed its tax credit claim on the basis of legal technicalities. You note that XXXXXXXXXX is Canadian owned and controlled and that it has earned its SR&ED tax credits.
I am precluded by the confidentiality provisions of the Income Tax Act from discussing the income tax affairs of XXXXXXXXXX However, in general in order to qualify for the SR&ED tax credit a corporation must be a Canadian-controlled private corporation (CCPC) as defined in the Income Tax Act. For purposes of that definition, a person or group of persons will be considered to control a corporation if they own more than 50% of the corporations's voting shares. A corporation will not be a CCPC if it is controlled by one or more non-resident persons or if they have a contingent right to acquire control. Even if more than 50% of the voting shares of a corporation are owned by Canadians, if non-resident persons have a contingent right which, if exercised, would give them control, that corporation will not qualify as a CCPC.
In closing, I can assure you that our officials make every effort to administer the SR&ED tax credit in a fair and impartial manner.
Thank you for bringing your concerns to the Department's attention.
Yours sincerely,
Jane Stewart, P.C.,M.P
Dave Palamar
957-2131
962810
October 31, 1996
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