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.
MINISTER/DM'S OFFICE
ADM'S OFFICE DM # 9621
CENTRAL RECORDS ADM # 940220
RETURN TO RULINGS, ROOM 303, MET. BLDG.
AUTHOR
SUBJECT OR CORPORATE CASE FILE
May 16, 1994
XXXXXXXXXX
Dear XXXXXXXXXX:
I am responding to your letter of February 10, 1994 concerning scientific research and experimental development (SR&ED) tax credits in respect of research and development carried on outside Canada by the XXXXXXXXXX.
Currently, the Act does not provide for ITC's on SR&ED carried on outside Canada and provision for the eligibility of such SR&ED for the ITC would require a change in the Act.
We have raised this matter with the Department of Finance and they are reluctant to make such an amendment at this time. In their view this issue must be considered in the context of the tax policy intent of Canada's income tax system for SR&ED.
The deductions and investment tax credits presently provided for in the Act in respect of SR&ED were designed to encourage SR&ED activity in Canada. The present government expenditure level on SR&ED is quite large.
The ineligibility of SR&ED performed offshore for investment tax credits reflects the fact that there is a limit on Canadian resources that can be spent on SR&ED. While the government would like to be more all encompassing in its approach to the funding of SR&ED through the income tax system, I am sure you will appreciate that the limitations on Canada's financial resources make it difficult to do so.
I wish to thank you for bringing this matter to my attention.
Yours sincerely,
Pierre Gravelle, Q.C.
F. Fontaine
940404