Allegro Wireless – Tax Court of Canada finds that software development qualified as SR&ED

Somewhat unusually, the development of software was found to be SR&ED. The taxpayer, which provided a software platform to its clients that permitted their workers to access the client systems through handheld devices, faced significant technological challenges in identifying ways to permit this to occur consistently. D’Arcy J stated:

I have concluded that when the Appellant conducted the projects at issue, it formulated hypotheses specifically aimed at reducing the identified technological uncertainty, followed appropriate procedures on testing, including the formulation, testing, and modification of hypotheses, and maintained a detailed record of the hypotheses tested and results achieved as the work progressed.

It also did not hurt that the projects “were the same or similar to projects in respect of which the Appellant received grants from the National Research Council of Canada.”

Neal Armstrong. Summary of Allegro Wireless Canada Inc. v. The Queen, 2021 TCC 27 under s. 248(1) - SR&ED.