Please note that the following document, although believed to be correct at the time of issue, may not represent the current position of the CRA.
Prenez note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle de l'ARC.
TO- VANCOUVER DISTRICT OFFICE
FROM- HEAD OFFICE Corporate Rulings Division T. Harris Attention: D. Carter (613) 995-1723 Large File Case Section 142-5-2
Scientific Research - Computer Software
This is in response to your memorandum of January 5, 1984 wherein you requested our comments as to the meaning of "a technical advance in a particular area of application".
We regret that we are unable to provide any meaningful comments with respect to your enquiry since the determination of whether or not computer software development involves "a technical advance in a particular area of application" must be determined on the basis of the facts of each case. However, we can comment that the mere fact of novelty, that the computer as a tool now makes the application possible or that the application has not been performed by computer before, does not by itself automatically cause the software development to qualify as scientific research. The computer software to be developed must constitute a technical advance in the area of the subject application, and involve significant technical risk and technical uncertainty.
In order to determine the development of in-house custom software programs by XXXX constitutes scientific research, we suggest that you submit for our consideration a detailed description of one or two of the projects undertaken by the taxpayer. In this regard the taxpayer should be requested to provide the following information concerning the project(s):
i) Purpose,
ii) Performance Targets,
iii) Major Tasks and Methods of Approach,
iv) Anticipated Technical Risks and How They Were Overcome
v) Researchers responsible for the project, and
vi) Taxpayer's views as to why the project qualifies as scientific research.
We regret that our reply could not be more specific
Chief Merchandising & Manufacturing Section Corporate Rulings Division Legislation Branch
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© Her Majesty the Queen in Right of Canada, 1984
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