Third Party Payments for SR&ED (1996)

October 15, 2012 SRED

Reference Article (>5 Years Old)

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On July 12, 1996 the Canada Revenue Agency (CRA) published a guide to clarify its position in regards to the application of the rules for third party payments for SR&ED.

SR&ED Rules and Definitions

Within the framework of the policy, the CRA states that the following types of payments can be considered as third party payments:

“an approved association that undertakes SR&ED;
an approved university, college, research institute or other similar institution;
a corporation resident in Canada and exempt from tax under paragraph 149(1)(j);
an approved organization that makes payments to an association, institution or corporation.” (1)

Any payments made to the above third parties are eligible if the SR&ED is carried out in Canada and the taxpayer that claims the amounts is the recipient of the results of that SR&ED. If any third party payments are used for purposes other than SR&ED, they cannot be used for claim purposes.

Types of Payments and Providing Proof for SR&ED

In all cases where payments are made to third parties for SR&ED purposes, it is crucial for the claimant to ensure they can provide evidence of the payments including the following information: