CRA finds that the s. 37(1)(a)(i.01) deduction was not available to a company that did not control the research and had no right to the results

S. 37(1)(a)(i.01) provides a deduction for current SR&ED carried on in Canada that is related to the business of the taxpayer and that is directly undertaken “on behalf of” the taxpayer. CRA stated:

“[O]n behalf of” refers to a situation where SR&ED is contracted out by the taxpayer to another party (“the Performer”), the taxpayer exercises some direction or control or some other involvement in the SR&ED undertaken by the Performer and the taxpayer acquires or maintains rights to use the results of the SR&ED.

Accordingly, s. 37(1)(a)(i.01) was not available where the claimant administered an SR&ED program conducted for a pharmaceutical company at hospitals and universities but had no control over the research or right to use the results.

Neal Armstrong. Summary of 13 April 2026 Internal T.I. 2025-1082711I7 under s. 37(1)(a)(i.01).