2011-0423901E5 Designation of an ERI

Principal Issues: Client wishes to be designated as an Eligible Research Institute for purposes of the OBRI tax credit

Position: Review of documentation submitted appears to fulfil one of the definitions of an ERI

Reasons: Legislation

Author: Robertson, George
Section: 97(27) of TA; 38(7), (8), (9), (10), (11) & (12) of Reg.37/09 of TA; 149(1)(l)

XXXXXXXXXX
                                                          2011-042390
                                                          George A. Robertson, CPA, CMA

May 14, 2015

Dear XXXXXXXXXX:

Re:   Application for Designation as an Eligible Research Institute

This is in reply to XXXXXXXXXX’s letter of September 27, 2011 where he requested that XXXXXXXXXX (the “Centre”) be designated as an Eligible Research Institute (“ERI”) for purposes of clause (c) of the definition of that term in subsection 97(27) of the Taxation Act, 2007(Ontario) (the “TA”). We acknowledge additional clarifying information in your February 23, 2013 submission.

The authority to grant or deny the designation is exercised pursuant to subsection 38(11) of Regulation 37/09 of the TA. Where a collection agreement is in effect, The Minister of National Revenue may exercise the powers and duties of the Ontario Minister of Finance pursuant to subsection 161(3) of the TA. Where the designation is granted, the decision is based on the information provided and representations made by the particular entity, its officers or directors and/or its authorized representatives. Changes in the organization or the activities carried on by the entity may affect its status as an ERI.

Based on the information you submitted my understanding of the facts is as follows:

1.    The Centre was incorporated as a not-for-profit corporation without share capital by Letters Patent dated XXXXXXXXXX.

2.    The Centre’s basic objects, as described in its Letters Patent, are:

*     To establish, own and operate a state of the art research and innovation centre for the purposes of:

o     conducting world-class research;

o     creating an infrastructure capable of supporting innovation from the fundamental stages of discovery to the incubation of intellectual property;

o establishing a reputation to attract world-class researchers and developing a critical mass of researchers to do both leading-edge basic research and XXXXXXXXXX research; and

o initiating, funding, promoting, encouraging and stimulating investments that will assist in creating a sustainable XXXXXXXXXX industry within the XXXXXXXXXX.

*     To create an information network which will provide education and sharing of information among the citizens of the XXXXXXXXXX, the XXXXXXXXXX sector, those interested in XXXXXXXXXX sustainability and the global community.

*     To initiate, fund, promote, support and stimulate collaboration with other research centres focused on similar goals including regional, national and international networks by supporting multi-disciplinary and multi-institutional collaborations.

*     To work with industry and the local community to create partnerships (e.g. public/private, private sector) to advance research and to commercialize research findings into new products and devices, technologies and programs.

3.    You maintain that the Centre currently qualifies as a “not-for-profit organization” (“NPO”) within the meaning of paragraph 149(1)(l) of the Income Tax Act and is expected to continue to be operated, in such a manner.

4.    As of XXXXXXXXXX, no single member [director] has more than 10 percent of the votes that may be cast by members.

5.    The Centre is not primarily funded by businesses or industries operating in the private sector.

6.    The XXXXXXXXXX (“University”) is an ERI under clause (a) of the definition of that term in subsection 97(27) of the TA. The Centre has been affiliated with the University since XXXXXXXXXX.

7.    The XXXXXXXXXX collaboration agreement (CA) between the Centre and the University allows teaching staff, students and research fellows of the University to actively participate in, and receive educational benefits from the scientific research and experimental development (SR&ED) activities carried out or promoted by the Centre. The CA reflects that the University considers the Centre to be capable of supporting and conducting SR&ED at the Centre’s premises, through qualified employees who have sufficient expertise and experience; and who have appropriate facilities and services located at those premises.

Approval

Provided that the above statements constitute a complete and accurate disclosure of all of the relevant facts, and provided that the Centre continues to operate as an NPO conducting SR&ED as described above, I am pleased to advise that, pursuant to the authority granted under subsection 38(11) of Regulation 37/09 of the TA, the Centre is hereby approved as an ERI effective as of XXXXXXXXXX, for the purposes of clause (c) the definition of that term in subsection 97(27) of the TA.

Yours sincerely,

Rick Stewart
Assistant Commissioner
Legislative Policy and Regulatory Affairs Branch

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