Docket: 2014-332(IT)I
BETWEEN:
INFLECTION
ANALYTICS LTD.,
Appellant,
and
HER
MAJESTY THE QUEEN,
Respondent.
EDITED VERSION OF TRANSCRIPT
OF
ORAL REASONS FOR JUDGMENT
Let the attached edited transcript of the Reasons for
Judgment delivered orally from the Bench at Ottawa, Canada on April 1, 2015 be
filed. I have edited the transcript (certified by the Court Reporter) for
style, clarity and to make minor corrections only. I did not make any
substantive changes.
Signed
at Ottawa, Canada this 22nd day of May 2015.
“Patrick Boyle”
REASONS FOR JUDGMENT
(Appeal
heard and decision rendered orally from the Bench
on
April 1, 2015 at Ottawa, Canada.)
Boyle J.
[1]
In the assumptions set out in the reply, the
Appellant is described as a software company dedicated to leveraging research
and market microstructure and computing technologies toward the development of
end-to-end fund management and trading solutions that allows asset managers to
focus on their global portfolio strategies.
[2]
In 2007, the Appellant paid fees to purchase or
licence historical data, and paid subscription fees for real time data in
respect of stocks and other securities trading data which they defined as the
electronic data. Six providers/vendors are identified. The electronic data was
required by the Appellant to simulate its projects in a real-life setting, and
no additional equipment was purchased or leased by the Appellant to receive the
electronic data. The electronic data was transmitted to the Appellant via the internet.
[3]
The only issue before me this afternoon is
whether the amounts paid to these vendors or suppliers constitute amounts that
are expenditures of a current nature for the lease of equipment for the
prosecution of SR and ED.
[4]
There were no witnesses called by either side in
this case. By agreement, two representative agreements were put in evidence
before me. At the same time, the Minister's amended reply was consented to be
accepted by the Appellant and the parties agreed to two provisos relating to
the representative contracts. Firstly, there was no vendor-provided device
installed in the Appellant's premises with respect to either of these two
vendors, and with respect to one of them, there was no vendor-provided
software.
[5]
Thomson Reuters' Equis agreement provides to the
Appellant access to the vendor's QuoteCenter service via the internet site to
obtain information contained in the service. The right to obtain information
language is used consistently through the document.
[6]
The second representative agreement is the
NASDAQ E-signal/e-service agreement. That agreement consistently describes the
licensing to the Appellant of the right to receive and use market data
information from NASDAQ's vendor's service via its e-signal.com website. The
addendum describing the underlying vendor's agreements uses similar language
about market data information being made available to be retransmitted to the
subscriber/Appellant.
[7]
These two representative agreements appear to clearly
be subscription service agreements to access websites to obtain information. The
e-service agreement defines the term vendor's service relevant to the addendum
as including certain equipment, software and communications. However, that is
to be related to the transmission of the information to or by the subscriber
Appellant.
[8]
The parties agreed that no device had been
provided by the vendor to the Appellant. Further, to the extent the Appellant
argues that that extends to the vendor's own equipment used to get the data
posted promptly to the site, I respectfully disagree that any rights are
transferred in that from the vendor to the Appellant/subscriber under the terms
of these agreements.
[9]
The Appellant relied heavily on the decision of Justice
Lamarre (as she was then) in Datakinetics where the issue was whether an
appellant who was acquiring a right to access and use a mainframe computer for
what it wished and who acquired a dedicated telecommunications line was leasing
those two pieces of equipment. She was satisfied they did.
[10]
In this case, however, as I have already
concluded, these agreements are to provide information via a website to be used
by the Appellant. They do not grant to the Appellant any rights in equipment of
the vendor that can be used by the Appellant as it wishes, as was the case in Datakinetics.
[11]
Similarly, the Appellant referenced the CRA
bandwidth policy document, and I would note that that talks specifically about
there being dedicated lines relating thereto. In any event, it is a CRA policy
and not the law. I am required to decide this appeal in accordance with the
law. To the extent I am either not fully understanding CRA's policy or not fully
agreeing with it, I have already concluded that, as a matter of law, the two
representative agreements in this appeal are providing the Appellant simply
with the right to access information via the website for a fee, so the CRA
bandwidth policy would not apply in any event.
[12]
On that basis, I cannot conclude that, in law,
they could be considered payments to the vendors for the lease of equipment. I therefore
do not need to decide whether or not it was used for the prosecution of SR and ED
in Canada, although I have no information or reason to doubt that it was.
[13]
I will be signing a judgment dismissing the
appeal for the reasons I have just given.
Signed at Ottawa,
Canada, this 22nd day of May 2015.
“Patrick Boyle”
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