Mort v. Canada
T-1665-89
Noël J.
22/1/93
25 pp.
Appeal from assessment denying scientific research tax credit (SRTC) claimed by plaintiff in 1985 income tax return-Whether debenture issued to plaintiff pursuant to arrangements, evidenced in writing, substantially advanced before October 10, 1984 under Income Tax Act, s. 194(4.2)(b)(ii)-Debenture issue structured to fund pump servicing system, challenged by Revenue Canada as not sufficiently advanced by October 10, 1984 to come within grandfathering provision-Pump servicing system project conceptualized well before 1984-Meaning of "substantially advanced" considered in First Fund Genesis Corporation v. The Queen (1991), 91 DTC 5361 (F.C.T.D.)-"Substantially advanced" requiring more than just nominal or insignificant progress made by parties towards securing SRTC transaction-Construction conforming with legislative intent leading to enactment of s. 194(4.2)(b)(ii)-Provision remedial in nature, not taxing measure nor tax exemption measure per se-Evidence indicating project clearly identified and conceptualized in 1982-Arrangements in place before October 10, 1984 including identified research and development project slated for SRTC issue, technical expertise as to qualifications for income tax purposes, budget, third party financing, spent engineering expenditures of $112,000, discussions, evidenced in writing, with request that project be funded by way of SRTC issue-No issue as to genuineness of project-Substantive steps towards proposed financing taken, essential components in place by October 10, 1984-Appeal allowed-Income Tax Act, S.C. 1970-71-72, c. 63, s. 194(4.2)(b)(ii) ( as enacted by S.C. 1986, c. 6, s. 103(1)).