In Kam-Press Metal Products Ltd. v. The Queen, 2021 FCA 88, the Federal Court of Appeal once again endorsed the criteria set out by the Tax Court of Canada in Northwest Hydraulics Consultants Limited v. The Queen (1998), 52 DTC 1839, in determining whether a project qualified for scientific research and experimental development (SR&ED) expenditures.

At issue, in particular, was the criterion requiring the taxpayer’s procedures to accord with the scientific method. The taxpayer argued that the definition of SR&ED in the Income Tax Act (Canada) did not include any reference to the “scientific method”, so the criterion should not be applied to it. The Court rejected this argument, noting that the criterion had been adopted by prior decisions of the Court.