National R&D – Federal Court of Appeal confirms the need for use of the scientific method in SR&ED
Rennie JA confirmed that, as set out in Northwest Hydraulic, the scientific method was required to be followed in order for work to qualify as SR&ED. The Tax Court judge “did not take a narrow or restrictive approach to what evidence might be encompassed by the scientific method,” and she had “noted that ‘what is important’ is there be the formulation of hypothesis, testing of those hypotheses and recording of results in a systematic manner.”
In contrast, here, the taxpayer “did not conduct its work in a methodical manner and did not keep adequate records.” The denial of its investment tax credit claims was confirmed.
Neal Armstrong. Summary of National R&D Inc. v. Canada, 2022 FCA 72 under s. 248(1) - SR&ED.