expenditure

The cost of yarn that the taxpayer expended in the course of an R&D project qualified under both s. 37(7)(c)(ii)(A) and Regulation 2900(2)(c), notwithstanding that the yarn subsequently was sold. Bowman TCJ. stated (at p. 736) that "the word 'expenditures' is a reasonably comprehensible English word ... . It is something one spends, an outlay. No meaning of which I am aware, either in ordinary parlance or in decided cases, would justify adding after it 'net of sales proceeds'".

The Minister was unsuccessful in a submission that the qualified expenditures of the taxpayer should be reduced by the amount of income derived by it from the sale of experimental production. Lamarre Proulx J. noted that none of the authority cited established that amounts from the sale of products must be deducted in the calculation of "expenditures".

S.7 employment benefits under an employee stock option program realized by employees engaged in qualifying scientific research activities constituted qualified expenditures of the taxpayer and expenditures made in respect of expenses incurred for salary or wages for purposes of s.