http://decisions.fca-caf.gc.ca/fca-caf/decisions/en/item/73469/index.do 
Immunovaccine Technologies Inc. v. Canada (September 11, 2014 – 2014 FCA 196, Nadon, Trudel, Boivin (Author) JJA) (English translation released March 18, 2015).
Précis: The taxpayer received roughly $3.8 million in funding from Atlantic Canada Opportunities Agency (“ACOA”) in its 2005, 2006, 2007 and 2008 taxation years. CRA determined that the amounts were “government assistance” which reduced its scientific research and experimental development expenses (“SRED”) pursuant to subsection 127(9) of the
Income Tax Act (the “Act”). The taxpayer was unsuccessful in an appeal before the Tax Court and appealed to the Federal Court of Appeal. The Court of Appeal held that there was no reversible error on the part of the Tax Court Judge. The language of the provision contemplated arrangements “which are not purely gratuitous and unilateral”. Moreover the agreement between the taxpayer and ACOA provided for repayment only as a percentage of gross income, without interest and terminated in 2017 whether or not the loan was repaid. The appeal was dismissed with costs.
Decision: The taxpayer received funding of roughly $3.8 million from ACOA in its 2005, 2006, 2007 and 2008 taxation years. The sole issue on this appeal was whether the Tax Court judge was correct in concluding that the funding amounted to “government assistance” which reduced the taxpayer’s SRED expenses:
[3] The appellant, a research and development company, develops vaccines against infectious diseases. ACOA is a federal agency established to support the economic development of the Atlantic region.
[4] On December 31, 2004, the appellant concluded an agreement with ACOA for close to $3,8 million in funding over the years 2005-2008 (the Agreement). Altogether, the appellant received $3,786,474 from ACOA under this Agreement.
[5] In March 2008, the Minister of National Revenue determined that the above amounts constituted government assistance.
[6] The Judge found that ACOA, in entering into the Agreement with the appellant, was carrying out its object and exercising its powers under the
Atlantic Canada Opportunities Agency Act (R.S.C., 1985, c. 41 (4th Suppl.)). Hence, based on the evidence and the context, the contribution by ACOA constituted “government assistance” within the meaning of subsection 127(9) of the Act and was not a regular loan advanced on reasonable terms for business purposes.
The taxpayer’s position was that this was a regular loan, not a form of government assistance:
[7] The appellant contends that the Agreement entered into with ACOA does not amount to a “forgivable loan” pursuant to subsection 127(9) of the Act but constitutes instead a “regular loan” which is not part of the definition in subsection 127(9) of the Act. The appellant thus argues that the Judge erred in law by interpreting the term “government assistance” as defined in subsection 127(9) of the Act and then applying this interpretation in respect of the Agreement between the appellant and ACOA.
The Court of Appeal held that the standard of review was one of palpable and overriding error and that the Tax Court Judge had not made such an error:
[9] In the present case, the Judge thoroughly reviewed the facts and the parties’ arguments. After careful consideration of the record and of counsel’s written and oral submissions, I propose to dismiss the appeal. The appellant has not convinced me that the Judge committed a reviewable error which would warrant the intervention of this Court.
The statutory provision contemplated assistance that was not purely gratuitous. Moreover the arrangement between the taxpayer and ACOA did not have the hallmarks of a regular loan:
[15] It is worthy of note that the phrase “assistance from a government” precedes an enumeration: grant, subsidy, forgivable loan, deduction from tax, investment allowance. However, the words “or as any other form of assistance” immediately follow this enumeration. Contrary to the appellant’s contention – and as the Judge found at paragraph 45 of her reasons – such phrasing does not restrict the form of assistance included in subsection 127(9). Instead, it provides a broad meaning to the word “assistance,” capable of encompassing a variety of forms of government assistance not necessarily limited to the said enumeration. Accordingly, this definition can include agreements which are not purely gratuitous and unilateral.
[16] Finally, I agree with the Judge that the language of the Agreement entered into by the parties indicates that their intention was to consider the contribution as “government assistance” and not as an ordinary business arrangement. Indeed, several substantive provisions in the Agreement and the schedules clearly point in that direction: the Agreement contains reporting requirements; the appellant is required to pay the contribution but only to the extent and as a percentage of gross income earned; the Agreement ends in 2017 whether or not there has been repayment; and the most ACOA can expect is the return of its contribution without interest.
As a result the appeal was dismissed with costs.