CRL Engineering – Tax Court of Canada finds that development of custom software qualified as SR&ED

An engineering firm engaged in a project to develop its web‑based system using algorithms and GPS data to provide accurate real‑time data for predicting the arrival time of public transit buses.

In the course of finding that the firm satisfied the five-factor test in Northwest Hydraulic as to what was SR&ED, Smith J noted that the hypothesis that was tested was whether “autonomous distributed computing systems based on general purposes computing units [can] be effectively deployed in order to provide accurate real‑time status information … in a real world transit system,” and stated:

There is necessarily a fine line between a “technological advancement” or “incremental improvements” to existing materials, devices, products or processes. This suggests that the Appellant need not prove that its activities were novel, but rather that there were incremental improvements to existing technology.

Neal Armstrong. Summary of CRL Engineering Ltd. v. The Queen, 2019 TCC 65 under s. 248(1) - SR&ED.