Kute Knit - Court of Quebec requires time sheets or other concrete evidence to support supervisory SR&ED salary claims under Reg. 2900(2)(b)

Kute Knit, which was acknowledged by the ARQ to be engaged in SR&ED, had claimed percentages (ranging from 15% to 75%) of the salaries incurred during its 2011 and 2012 taxation years for 13 management and supervisory employees as being the times that they were directly supervising the prosecution of SR&ED within the meaning of the Quebec equivalent of Reg. 2900(2)(b). These same percentages had been used for the managers and supervisors since 2006.

Alcindor JCQ confirmed the full denial by the ARQ of such management and supervisor salary claims in the absence of any documentary evidence (such as time sheets) or other concrete evidence (such as testimony from the employees themselves as to what they did on each project) as to the nature and extent of the alleged supervisory SR&ED work performed by those employees.

Neal Armstrong. Summary of Manufacture Kute Knit Inc. v Agence du revenu du Qu├ębec, 2022 QCCQ 3480 under Reg. 2900(2)(b).