Concept Danat Inc. (February 1, 2019 – 2019 TCC 32, Lafleur J.).
Précis: The taxpayer claimed SRED expense in respect of three projects in its clothing business. The issue in each case was whether the taxpayer resolved technological uncertainty or was just dealing with routine engineering. The Court concluded that the latter was the case in all three projects and dismissed the appeal without costs (it was an informal procedure appeal).
Decision: The question of resolving technological uncertainty presents itself in most reported SRED cases. The Court’s holding on the second of the three projects at issue in this appeal is illustrative of the central flaw in the taxpayer’s entire case:
 I am of the opinion that there was no technological uncertainty in this project, but instead technical problems or constraints. Resolving the problems identified by Danat and achieving the objectives were reasonably predictable using standard procedures or routine engineering. The problems encountered by Danat were technical in nature since the existing technological knowledge base was sufficient for resolving the problems and achieving the objectives. The evidence showed that the LaserPro machine and the embroiderer were used in a normal way and that Danat used common techniques to deal with the problems encountered. Danat had to determine the machines’ compensation and alignment settings and managed to do so without changing the existing technology of those machines.
In addition the taxpayer’s claim was deficient in terms of the accuracy of its record-keeping:
 With respect to the three projects, Danat did not satisfy me that the time estimate provided by Danat was accurate. According to Mr. Bourgault’s testimony, he estimated that 10.2% of the employees' time was spent on the SR&ED activities in question, and it was on that basis that the claim for the salaries was made. However, Danat did not provide the exact details of the hours spent on those projects. I am of the opinion that an accurate record of hours worked must be provided for supporting an SR&ED claim (Hypercube Inc. v. The Queen, 2015 TCC 65 at para. 48, 2015 DTC 1089). Similarly, the description of the tasks performed by the various employees was not clear or sufficiently detailed to support the claim.
Thus the taxpayer’s appeal was dismissed. There was no order as to costs since this was an informal procedure appeal.