Caroline Berthelet

The Respondent brought a motion to amend its Reply to advance an alternative argument based on the thin capitalization rules under subsection 18(4) of the Income Tax Act to support the disallowance of interest expense previously reassessed under paragraph 20(1)(c).

The Tax Court allowed the motion, finding that the 2016 amendments to subsection 152(9) of the Act permit the Minister to advance an alternative basis or argument even if it relies on different facts or a different source, provided the total amount of tax assessed does not increase.

The Court found no non-compensable prejudice to the Appellant.

The appellants, Biscuiterie Dominic Inc. and La Petite Bretonne Inc., appealed the Minister's refusal to recognize six food development projects as scientific research and experimental development (SR&ED) activities for the 2017 and 2018 taxation years.

The projects involved modifying recipes to improve shelf life and replace ingredients.

The Tax Court of Canada dismissed the appeals, finding that the appellants failed to demonstrate that the projects involved technological risk or uncertainty that could not be removed by routine engineering or standard procedures.