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.
Dear Sirs:
Re: Scientific Research and Experimental Development-Landscaping Costs
This is in reply to your letter of July 5, 1991 concerning subsection 37(1) of the Income Tax Act (the "Act").
We apologize for the delay in replying to your request.
Paragraph 37(7)(f) of the Act restricts the eligibility of current and capital expenditures on scientific research and experimental development. Specifically, subparagraph 37(7)(f)(i) indicates that buildings other than special purpose buildings will not qualify as expenditures for scientific research and experimental development.
You ask if landscaping cost which would otherwise be deductible under paragraph 20(1)(aa) will qualify as scientific research and experimental development expenditures, assuming the taxpayer is a sole purpose scientific research and experimental development performer earning all or substantially all of its income from such activities.
Costs properly described as landscaping are deductible under subsection 20(1)(aa) even though they are capital expenditures. In the absence of this subsection, these costs could not be deducted in the computation of income. Landscaping is not included in any of the categories of depreciable property. Subparagraph 37(1)(b)(i) precludes the inclusion of capital expenditures which are not otherwise depreciable property in the scientific research and experimental development expenditures "pool". Consequently, since these costs are not included in any other paragraph of subsection 37(1), they do not qualify as a scientific research and experimental development expenditures.
Normal maintenance and upkeep of landscaping is a current expenditure and normally the taxpayer, referred to above, could include reasonable costs of this nature under subparagraph 37(1)(a)(i) as scientific research and experimental development expenditures for purposes of the Act and the Income Tax Regulations.
We trust these comments will be of assistance.
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© Sa Majesté la Reine du Chef du Canada, 1991
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