Les Abeilles Service De Conditionnement Inc. v. The Queen (2014 CCI 313)

In Les Abeilles Service De Conditionnement Inc. v. The Queen (2014 CCI 313), Justice Jorre ruled in favor of the taxpayer’s SR&ED claims that related to four different projects. The goal of each project was to make improvements in the methods of assembling customer product components. The taxpayer maintained that each of the four projects was in accordance with paragraph (c) of the definition of scientific research and experimental development in subsection 248(1) of the Income Tax Act (the “Act”).

In this case, the court dismissed the notion that there is a mandatory requirement for the taxpayer to have contemporary documents with particular content as a condition to satisfy SR&ED. This went against the the Canada Revenue Agency’s (CRA) application of administrative policy, which in this case, governed their rejection of the taxpayer’s claims.

The Minister of National Revenue stated that the technological barriers that the taxpayer was facing in the projects corresponded to standard engineering challenges. While it was not apparent that the individual tests presented important advancements, the judge dismissed this argument by stating that it was important to consider each project globally. In addition, the Court found that in each project, the taxpayer had a reasonable degree of technological uncertainty and tested a number of solutions, hence justifying the projects as experimental development.

For more information on SR&ED claims and eligible expenditures, feel free to contact Swanson Reed R&D tax advisors.

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