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.
Attention: XXXXXXXXXX
Dear Sirs:
Re: "Approved" Association Status
This is in reply to your letter dated May 15, 1997 requesting that XXXXXXXXXX be recognized as an "approved association".
The two brochures giving a brief overview of XXXXXXXXXX do not provide sufficient detailed information required for determining the approval of XXXXXXXXXX.
The requirements in respect of the application for, and the granting of, such "approved" status, for the purposes of subparagraph 37(1)(a)(ii) and subsection 37(7) of the Income Tax Act (the "Act"), are as follows:
1. To become an approved association, an organization must meet the criteria of a non-profit organization and must be able to demonstrate that it is able to carry out scientific research and experimental development ("SR&ED") in Canada on an ongoing basis. More specifically, the organization must also meet all the following requirements:
(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) In order to satisfy the requirements for non-profit status; there must be (i) no personal benefit to members (ii) no control of other associations and (iii) satisfactory provisions for the distribution of assets upon dissolution, etc.
(d) The general public must be a beneficiary of the results of any successful research.
(e) The funding of the association must be sufficient to ensure ongoing SR&ED.
Please submit any documentary evidence to support the above information.
3. In order to approve an association, we would also require copies of the following documentation relating to the organization and its activities:
(a) Identification of the legislation under which the association was created.
(b) Copies of the organization's charter, code of ethics and by-laws which should indicate (i) that the organization does satisfy all requirements described in clause 37(1)(a)(ii)(A) or (B) of the Act and the post-amble thereto and (ii) how the organization's property will be distributed in the event of a wind-up.
(c) A detailed description of the association's arrangements for obtaining funds.
(d) A detailed description of the association's arrangements for disbursing funds for research projects.
(e) Financial statements for prior years, if applicable.
(f) 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 hope the above comments will be helpful to you. Should you require any further information concerning the requirements listed above, you may contact Frank Fontaine at (613) 957-4364.
Yours truly
for Director
Resources, Partnerships and Trusts Division
Income Tax Rulings and Interpretations Directorate
Policy and Legislation Branch
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© Her Majesty the Queen in Right of Canada, 1997
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© Sa Majesté la Reine du Chef du Canada, 1997
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