Hubmar – Court of Quebec finds that the applicable salaries of employees engaged in SR&ED but who did not record their time could not be recognized

Although the ARQ accepted that the taxpayer was carrying on SR&ED, the taxpayer had failed to establish with any convincing evidence what proportion of the remuneration of its employees qualified under the Quebec equivalent of federal Reg. 2900(2)(b) as being amounts that could reasonably be considered to be in respect of the prosecution of such SR&ED.

After stating that “[i]t is true that neither the Act nor the Regulations require that employee time sheets be prepared and filed,” Dufour J noted that time sheets were the only evidence presented, and these had been fabricated well after the fact and were incoherent and unreliable.

Neal Armstrong. Summary of Hubmar International Inc. v. Agence du revenu du Québec, 2021 QCCQ 12822 under Reg. 2900(2)(b).