Groupmark Canada Ltd. v. Canada
T-2635-90
Walsh D.J.
12/3/93
12 pp.
Plaintiff automobile driver's club-N.D.R. Technologies Inc. (NDR), non-arm's length company, building racing sail boat with experimental keel -- Plaintiff providing financing -- Pursuant to agreement dated May 18, 1984 NDR issuing non-interest bearing promissory note to plaintiff for $120,000 -- Income Tax Act, s. 194 permitting designation of amount of consideration for which issued debt obligation or granted right under scientific research and experimental development financing contract -- NDR designating $120,000 in respect of promissory note in plaintiff's name -- Plaintiff advancing to NDR over $30,000 prior to date of agreement, over $50,000 prior to date of s. 194 designation, and eventually over $120,000 in total -- Plaintiff claiming tax credit of $60,000 -- S. 127.3(1) providing deduction for scientific research and experimental development tax credit (defined in s. 127.3(2)(a) as "aggregate of all amounts" each of which equal to 50% of amount designated under s. 194(4)) -- Defendant disputing validity of designation of $120,000 as exceeding consideration for which note issued -- Submitting payments before and after note issued not constituting "consideration" for which promissory note issued within meaning of s. 194(4) -- Meaning of "consideration" in s. 194(4) -- Appeal allowed -- Defendant's construction of "consideration" unrealistic and contrary to intent of Act -- Income Tax Act, S.C. 1970-71-72, c. 63, ss. 127.3(1) (as enacted by S.C. 1984, c. 1, s. 73; 1986, c. 6, s. 15), (2)(a) (as am. by S.C. 1984, c. 45, s. 46; 1986, c. 6, s. 15), 194(4) (as enacted by S.C. 1984, c. 1, s. 95; 1986, c. 6, s. 15).