29 March 1990 Ruling 59311 F - Request for Designation as an Approved Research

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.

March 29, 1990

Dear Sirs:

Re: 24(1) Request for designation as an Approved Research Institute for purposes of Clause 37(1)(a)(ii)(B) of the Income Tax Act

We are writing in reply to your request of December 21, 1989, that the  24(1)  be designated as an "approved research institute" for purposes of clause 37(1)(a)(ii)(B) of the Income Tax Act (the "Act").

It is the Department's view that the  24(1)

However, as all Canadian universities are approved for purposes of the Act, payments to a Canadian university under clause 37(1)(a)(ii)(B) of the Act or to an incorporated hospital under clause 37(1)(a)(ii)(D) of the Act for scientific research and experimental development ("SR & ED") carried out by a joint undertaking such as the Institute will be deductible for income tax purposes under paragraph 37(1)(a) of then Act provided they meet the same requirements that are required when payments are made to an "approved research institute", namely:

1)     The taxpayer making the payments must have carried on business in Canada during the taxation year.

2)     The taxpayer must file prescribed form T661 containing prescribed information with his return of income for the particular taxation year.

3)     The payments must be of a current nature.

4)     The payments must be used for SR & ED carried on in Canada.

5)     The SR & ED must be related to the business of the taxpayer and the taxpayer must be entitled to exploit the results of the SR & ED.

Given that  24(1)  and the law with respect to universities and incorporated hospitals is the same as with respect to an "approved research institute", there does not appear to be any benefit to changing the structure of the  24(1)  in order to obtain status as an "approved research institute".

We trust that our comments will be of assistance.

for DirectorBusiness and General DivisionSpecialty Rulings DirectorateLegislative and Intergovernmental Affairs Branch