Johnson Development is one of Canada’s largest independently owned property development companies. The company has been a top competitor in the industry since its formation in the 1980’s.

In 2017, Johnson Development conducted a research and development project to develop a community as a sustainable development and overcome site specific technical issues associated with stormwater management, water sensitive urban design, a lot design solution for the efficient use of the land and unknown soil conditions.

The goal of Johnson’s SR&ED project was to investigate, design and test new and improved methodologies and techniques for the sustainable development of the new community site, while overcoming site-specific technical issues.


Johnson Development believed it could achieve the above goals by implementing key research and development activities. To be eligible for the Scientific Research and Experimental Development Tax Incentive, Johnson’s work had to meet the definition of SR&ED in subsection 248(1) of the Income Tax Act (see Commentary below).

Background research to evaluate current knowledge gaps and determine feasibility (background research of improved techniques for sustainable development).

The development of a storm water management system involves the creation of new knowledge around how to manage stormwater issues in a manner that is sustainable and environmental. During the scoping process Johnson Development determined that no solution was readily available to manage stormwater issues, given the unique characteristics of the site.

Activities during this stage of the project included research and  development of new knowledge about how to manage stormwater issues on an infill site having regard to the unique characteristics of an infill site, and how to capture and treat stormwater in a way that prevents run off into a surrounding creek.

Design and development of a series of prototypes to achieve the technical objectives (design and development of modified sustainability techniques).

Johnson development had to design, develop and implement methodologies for water management including:

  • A storm water management plan, including:
    • Assessment of contamination levels due to topsoil erosion;
    • Investigations into flora and fauna protection;
    • Development of methodology to capture and treat storm water, including water tanks and roadside catchments;
  • A water sensitive urban design plan, including:
    • Investigations and development of methodologies to maximize water conservation (and decrease household water consumption) for urban planning, landscape planning and architectural house designs applications of water tanks in the lots;
    • Continual monitoring of water levels.

Trials and analysis of data to achieve results that can be reproduced to a satisfactory standard and to test the hypothesis (testing of the new methodologies).

Johnson Development conducted multiple trials, evaluated results and made modifications to the new methodologies as required during this stage until the technical objective was achieved. This included trials and evaluation to determine suitability of soil to build on.

Ongoing analysis of customer or user feedback to improve the prototype design (feedback SR&ED of the water-quality system).

The feedback was necessary to evaluate the performance capabilities of the new design in the field and to improve any flaws in the design. The feedback activities included:

  • Ongoing analysis and testing to improve the efficiency and safety of the project.
  • Ongoing development and modification to interpret the experimental results, and draw conclusions that serve as starting points for the development of new hypotheses.
  • Commercial analysis and functionality review.


To qualify, the work must meet the following definition of “scientific research and experimental development” (SR&ED), as defined in subsection 248(1) of the Income Tax Act.

“Scientific research and experimental development” means systematic investigation or search that is carried out in a field of science or technology by means of experiment or analysis and that is:

(a) basic research, namely work undertaken for the advancement of scientific knowledge without a specific practical application in view;

(b) applied research, namely work undertaken for the advancement of scientific knowledge with a specific practical application in view; or

(c) experimental development, namely, work undertaken for the purpose of achieving technological advancement for the purpose of creating new, or improving existing, materials, devices, products or processes, including incremental improvements thereto;

and, in applying this definition in respect of a taxpayer, includes:

(d) work undertaken by or on behalf of the taxpayer with respect to engineering, design, operations research, mathematical analysis, computer programming, data collection, testing or psychological research, where the work is commensurate with the needs, and directly in support, of work described in paragraph (a), (b), or (c) that is undertaken in Canada by or on behalf of the taxpayer.


Similar to any tax credit or deduction, Johnson Development had to save business records that outlined what it did in its SR&ED activities, including experimental activities and documents to prove that the work took place in a systematic manner. Johnson Development saved the following documentation:

  • Project records/ lab notes
  • Innovation Log
  • Conceptual sketches
  • Design drawings
  • Background research
  • Testing protocols
  • Results of records of analysis from testing/trial runs
  • Records of resource allocation/usage logs
  • Staff time sheets
  • Tax invoices
  • Receipts

By having these records on file, Johnson Development confirmed that it was “compliance ready” — meaning if it was audited by the CRA, it could present documentation to show the progression of its SR&ED work, ultimately proving its SR&ED eligibility.

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