Concept Danat – Tax Court of Canada states that an SR&ED claim cannot be based on estimated hours worked

The taxpayer based its reported expenditures on three alleged SR&ED projects on its estimate that its employees spent 10.2% of their time on the SR&ED activities. In rejecting this approach, Lafleur J stated:

Danat has not provided exact details of the hours devoted to the projects. …[A]n exact register of the hours worked must be provided in order to make an SR&ED claim … . Similarly, the description of the tasks carried out by the different employees was not clear or sufficiently detailed enough to make the claim.

The projects in question also did not qualify as SR&ED given inter alia their lack of technological uncertainty. In passing, Lafleur J stated that CRA’s guidelines on what constituted SR&ED in Eligibility of Work for SR&ED Investment Tax Credits Policy were “useful and reliable.”

Neal Armstrong. Summaries of Concept Danat Inc. v. The Queen, 2019 TCC 32 under s. 37(1)(a)(i) and s. 248(1) - SR&ED.