13 March 1995 External T.I. 9432905 - APPROVED ASSOCIATION SR&ED

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.

Principal Issues:

	Requirements needed for approved association status 	par. 37(1)(a)

Position TAKEN:

Reasons FOR POSITION TAKEN:

		5-943290
XXXXXXXXXX		Franklyn S. Gillman

Attention: XXXXXXXXXX

March 13, 1995

Dear Sirs:

Re: Approved Association Status

This is in reply to your letter dated December 19, 1994, in which you requested the requirements necessary so that the XXXXXXXXXX may qualify as an "approved association" for purposes of clause 37(1)(a)(ii)(A) of the Income Tax Act (the "Act").

An association, in order to be considered "approved", must receive written approval from our Minister. In order for any organization to become an "approved association", it must meet the criteria of a non-profit organization and be able to demonstrate that it is able to carry out SR&ED on an ongoing basis. More specifically, the requirements are as follows:

(a)it must have the facilities and personnel capable of carrying out SR&ED as defined in the Act;

(b)it must carry on only activities that are unquestionably SR&ED;

(c)it must satisfy the requirements for non-profit status, such as no personal benefit to members, no control of other associations, satisfactory provisions for distribution of assets upon dissolution, etc.;

(d)the general public must be a beneficiary of the results of successful research; and

(e)the funding of the association must be sufficient to ensure ongoing SR&ED.

Although there is no charge by our Department to approve an association, in order to do so, we would require copies of the following documentation relating to the organization and its activities:

(i)identification of the legislation under which the association was or is to be created;

(ii)copies of the organization's charter, code of ethics and by-laws which should indicate that it will satisfy all requirements in clause 37(1)(a)(ii)(A) of the Act and the post-amble thereto, as well as how its property will be distributed in the event of wind-up;

(iii)a detailed description of the association's arrangements for obtaining funds;

(iv)a detailed description of the association's arrangements for disbursing funds;

(v)financial statements for prior years, if the association already exists; and

(vi)details of the research activities to be carried out by the association in the future and evidence that it has the staff and facilities to carry out such activities.

We trust these comments will be of assistance.

Yours truly,

for Director
Manufacturing Industries,
Partnerships and Trusts Division
Rulings Directorate
Policy and Legislation Branch