Data Kinetics Ltd. v. The Queen, 98 DTC 1877, [1998] 4 CTC 2618 (TCC) -- summary under Paragraph 37(8)(a)

The taxpayer, which was engaged in researching and developing advanced data management and memory management software systems for large mainframe computers, and which had adopted the proxy method for calculating SR&ED expenditures, was able to include in s. 37(8)(a)(ii)(B)(I) the cost of a dedicated telephone line that was used to pass instructions and data from the taxpayer's employees in Ottawa (none of whom left Canada) to the staff of an independent company in Birmingham, Alabama whose mainframe computer the taxpayer was leasing for testing purposes. In finding that the testing was performed in respect of SR&ED in Canada, Lamarre TCJ. stated (at p. 1884) that "the leasing expenditures made in the U.S. merely facilitate a mechanical testing process that is part and in support of the whole SR&ED project carried on in Canada".