27 May 1980 Income Tax Severed Letter

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.

May 27, 1980

R.O. Earp (613) 995-1723

XXXX

Dear Sirs:

This will reply to your letter dated March 11, 1980 concerning the application of paragraphs 37.1(1)(b) and 37.1(5)(b) of the Income Tax Act as they relate to payments received from foreign governments or their agencies in connection with scientific research carried out by a Canadian resident corporation on behalf of the foreign governments and their agencies.

You advise that two of your clients, Canadian resident corporations, have recently entered into significant dollar contracts with two foreign governments to perform services which would qualify as qualified expenditures pursuant to section 37.1 of the Act. The contracts will be carried out exclusively in Canada using processes and methods still to be developed.

We confirm that pursuant to paragraphs 37.1(1)(b) and 37.1(5)(b), qualified expenditures of your clients would not be reduced by the amounts of the payments from the foreign governments and their agencies assuming, of course, that such payors are not carrying on business in Canada.

Yours truly,

for Director General Corporate Rulings Directorate Legislation Branch ROE/mj s. 37.1