Lathe that could handle large pieces and achieve demanding tolerances was technological step forward

Tax - Income tax - Tax credits

Taxpayer worked on two projects to design and build its own lathes to manufacture turbine components. Taxpayer claimed scientific research and experimental (SRED) expenditures and shared-use-equipment (SUE) for three taxation years, which formed basis for investment tax credits (ITCs). Minister reassessed taxpayer to deny ITCs on basis that work did not constitute SRED. Taxpayer appealed. Appeal allowed in part. Taxpayer was denied SRED claimed in 2006 for T lathes it had purchased and then sold in order to make their own M lathes. Taxpayer was allowed SRED ITCs for 80-ton M lathe in 2007 and 2008 as five criteria were met. Taxpayer faced technological uncertainty of system uncertainty. Process of creating new lathe that could handle large work pieces while achieving demanding tolerances represented step forward in technical knowledge. Taxpayer was denied claim for two-thirds of ITCs for 2008 because 60-ton and 40-ton M lathes did not have much originality factored into their designs, as they were mostly small versions of 80-ton M lathe. Taxpayer was allowed SRED ITCs for double wheel roll grinding machine for all three years because five criteria were met. Although project was concluded before any successful outcome due to cost, there was technological advancement.

A & D Precision Limited v. The Queen (2019), 2019 CarswellNat 541, 2019 TCC 48, B. Russell J. (T.C.C. [General Procedure]).

Case Law is a weekly summary of notable civil and criminal court decisions by the Supreme Court of Canada, the Federal Court of Canada and all Ontario courts. These cases may be found online in WestlawNext Canada. To subscribe, please visit

Free newsletter

Our newsletter is FREE and keeps you up to date on all the developments in the Ontario legal community. Please enter your email address below to subscribe.

Recent articles & video

Legal tech filling supply gap in wills, trusts and estate planning

Superior Court to pilot CaseLines for select civil motions and pre-trial conferences

Human rights lawyer Ena Chadha named interim chief commissioner of OHRC

Report urges WSIB to improve evidence-based decision-making in workplace cancer claims

Family court must wait for conclusion of refugee claim before granting return order: Court of Appeal

Amid Black Lives Matter movement, less talk, more walk on diversity says Toronto lawyer Ryan Watkins

Most Read Articles

New legislation allows for eviction orders without Landlord and Tenant Board hearing

Changes to landlord/tenant law address jurisdictional confusion and no-fault evictions

Legal Aid Ontario to launch modernized framework under new Legal Aid Services Act

Amid Black Lives Matter movement, less talk, more walk on diversity says Toronto lawyer Ryan Watkins