Another judgment of the Tax Court of Canada in the case of ” Concept Danat Inc. v. The Queen “confirms the importance of documentation in determining whether the work performed in a project constitutes SR&ED within the meaning of subsection 248 (1) of the Tax Act. on income.
Extract from the judgment
“Regarding the three projects, Danat did not convince me that Danat’s estimate of hours was accurate. According to Mr. Bourgault’s testimony, he estimated that 10.2% of the employees’ time was devoted to the SR&ED activities in question and it is on this basis that the claim for wages was made. However, Danat did not provide exact details of the hours spent on these projects. In my opinion, an accurate record of hours worked must be provided to support an SR&ED claim (Hypercube Inc. v. The Queen, 2015 ITC 65 at para 48, 2015 DTC 1089). Similarly, the description of the tasks performed by the various employees was unclear and not detailed enough to support the request. “
Clearly, this judgment establishes that it is essential for a company claiming SR&ED tax credits to put in place a good time sheet system describing the activities of employees involved in eligible activities.
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