AboutSR&ED Updates and Changes

SR&ED Program Updates: January-March 2021

Updated to Reflect New Policies (2022) 
*** Some of the policies referenced were updated 2021-08-13. This article has been updated and is accurate as of 2022. *** 
SR&ED Program Updates: October-December 2020
SR&ED Program Updates: January-March 2021

This post outlines SR&ED program updates from January-March 2021, including administrative, policy, tax law, and court cases. COVID-19  continued to dominate the country for the quarter, but many businesses and agencies have found a new way to operate. We have identified some key trends to watch in the SR&ED environment.  


The COVID-19 pandemic has impacted the entire world.  The first quarter of 2021 saw the Tax Court of Canada (TCC) and Canada Revenue Agency (CRA) continue to operate and return to a semblance of normalcy with new COVID-19 restrictions in place.

SR&ED Education and Resources Articles

SR&ED Education and Resources spent the January-March 2021 winter months discussing the effects of COVID-19 on SR&ED, drilling down into the forms to explain the various key lines in our blog posts, in the interest of further de-demystifying the application process for researchers and claimants. 

T661 Guidance

Following along with the success of our 2020 blogs, we continued to focus on questions that our clients frequently ask during the course of the SR&ED claim process. These delve into topics of interest and serve to demystify the SR&ED application process for prospective claimants.

Administrative, Policy, and Legislative

The first quarter of 2021 was quiet in regards to SR&ED news and information updates from CRA. We explained changes to the T661 made in late 2020 but taking effect in 2021 in Understanding changes to the SR&ED form: The T661.

From January-March 2021 the CRA posted one update, on February 19, 2020, on their “What’s New – SR&ED Program” website: Guidance: How the Canada emergency wage subsidy affects SR&ED claims.  We summarized this post on our site, CEWS and SR&ED – Guidance from the CRA. If you received any Canadian emergency wage subsidy, this post is informative before filing your SR&ED claim.

Judicial Proceedings

In terms of judicial proceedings, Q1 was quiet with only four SR&ED court rulings released or on the docket. Due to time constraints, we have summarized rulings from 2020 which we had not been able to address.

Leyton Finder Expert Group Inc. v. The Ultragen Group Ltd. (2014)

This ruling addressed the issue of contracts between taxpayers and SR&ED consultants. The two parties accused one another of acting in bad faith regarding their contractual relations resulting in unnecessary work. The contract between Leyton Finder Group and Ultragen stated Leyton would receive 20% of the SR&ED investment tax credits at the federal and provincial levels plus taxes and interest. Leyton assisted with the technical narrative for 2 projects for 2010 and one project in 2011. Ultragen submitted a technical narrative for a separate project in which Leyton was not involved, despite requests to the individual in charge of the project by Leyton. Ultragen argued that because Leyton was not involved in the project they were not entitled to 20% of the ITC. The Tribunal ruled that while Ultragen acted in bad faith Leyton was only entitled to 20% of the SR&ED ITCs which it helped to prepare, an amount totalling $5,528.10 (plus 18% interest per annum).  The tribunal also ruled Ultragen must pay $20,000 for disturbance and inconvenience plus interest due to Ultragen’s dishonest conduct and inconveniences.

For more details and analysis, you can view our complete analysis of Leyton Finder Expert Group Inc. v. The Ultragen Group Ltd. (2014).

Indusol Industrial Control Ltd. v. The Queen (2020)

This ruling addressed the technological eligibility of the Appellant’s project. In order to determine if SR&ED took place, the judge conducted a two-part test. First, he had to determine if the work met the criteria of the definition of SR&ED, which the Appellant had the burden of proof to demonstrate. Second, if the first was met, he must determine if the expenses are eligible SR&ED expenses. In order to answer these questions, the judge used the five questions developed in Northwest Hydraulic Consultants Ltd. v. The Queen (1998) and CW Agencies Inc. v. The Queen (2001). The judge went through each of the five questions to determine if the Appellants had met the criteria. The judge ruled that the work conducted by the Appellant was not SR&ED eligible, therefore, the case was dismissed with costs to the Respondent.

For more details and analysis, you can view our complete analysis of Indusol Industrial Control Ltd. v. The Queen (2020).

Summary of SR&ED Updates

SR&ED program updates from January-March 2021 were busy as the country dealt with the pandemic and how to resume operations. As in the prior three months, SR&ED Education and Resources continued our educational mandate, writing eight more informative blog posts.  Check back for more updates as 2021 continues.

Share your thoughts on the recent SR&ED program updates
** Note: In 2020, the CRA updated the term “Ombudsman” to “Ombudsperson”. ** 

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