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.
TAX EXECUTIVE INSTITUTE
December 13, 1994
SCIENTIFIC RESEARCH AND EXPERIMENTAL DEVELOPMENT
Question: 18
Where a taxpayer elects to use the proxy method to determine qualifying scientific research and experimental development expenses, the portion of the salary or wages of employees directly engaged in scientific research and experimental development that reasonably relates to time spent on scientific research and experimental development activity qualifies as a subsection 37(1) expense and is also included as a qualified expenditure for the purpose of computing the amount of investment tax credit. Since taxable benefits are included in the definition of salary or wages in the Act, please confirm that, when the taxpayer does not elect to use the proxy method, that such benefits are included as qualified scientific research and experimental development and are not considered prescribed expenditures (and, therefore ineligible for the investment tax credit) pursuant to Regulation 2902.
Department's Position
It should be noted that proposed subsections 2900(7) and 2900(9) of the Regulations contain provisions that limit the amount that may be claimed as salary and wages for the purpose of determining the proxy amount, for instance taxable benefits pursuant to section 6 and 7 of the Act are excluded. When the taxpayer does not elect to use the proxy method, the salary and wages which are eligible as qualifying scientific research and experimental development must be reasonable and directly attributable to scientific research and experimental development. In certain circumstances it may be appropriate to apply the test of reasonableness and wholly attributable to a particular taxable benefit rather than to the total salary and wages. Regulation 2902 contains specific provisions that identify certain costs which are prescribed. Although it would depend on the circumstances, it is possible that an amount, which is a prescribed amount pursuant to section 2902 of the Regulations could also be a taxable benefit, for example, under paragraph 6(1)(a) of the Act.
Author: Cal Brown
File: 943047
Date: December 6, 1994
All rights reserved. Permission is granted to electronically copy and to print in hard copy for internal use only. No part of this information may be reproduced, modified, transmitted or redistributed in any form or by any means, electronic, mechanical, photocopying, recording or otherwise, or stored in a retrieval system for any purpose other than noted above (including sales), without prior written permission of Canada Revenue Agency, Ottawa, Ontario K1A 0L5
© Her Majesty the Queen in Right of Canada, 1994
Tous droits réservés. Il est permis de copier sous forme électronique ou d'imprimer pour un usage interne seulement. Toutefois, il est interdit de reproduire, de modifier, de transmettre ou de redistributer de l'information, sous quelque forme ou par quelque moyen que ce soit, de facon électronique, méchanique, photocopies ou autre, ou par stockage dans des systèmes d'extraction ou pour tout usage autre que ceux susmentionnés (incluant pour fin commerciale), sans l'autorisation écrite préalable de l'Agence du revenu du Canada, Ottawa, Ontario K1A 0L5.
© Sa Majesté la Reine du Chef du Canada, 1994
Email this Content