T661 Guide to SR&ED
SR&ED is a key Canadian entitlement tax credit program run nationwide, has a federal and a provincial component and has very strict guidelines and requirements that your company must uphold from documentation, evidence linking, cost tracking and project drafting. The main Tax document is called the T661 for SR&ED and is attached with your corporate annual tax filling (via your T2), or can be applied retroactively to a tax year-end within 18-months of your previous fiscal year-end date. It covers a number of expenses, Labour, Materials, Consultants, 3rd party Payments (for example to academic research groups), and focuses on the Canadian eligible expenditures. For a deep dive into the SR&ED world please visit CRA’s main page listed below and/or look for a comprehensive guide called the T4088- SR&ED Guide which details all aspects of how to properly complete the T661 tax form. Naturally this is a key part of the services we provide at GetGrants. Our active program engages your company year-round to prepare materials, maximize opportunities, and handle all drafting and submission aspects for our clients.
Contact: Regional based on Tax Office (phone & fax only) Link here
Timeline: Accept all-year round, due within 18-months of tax year-end (best to file with taxes)
- CCPC: Canadian Controlled Private corp.
- Can earn a refundable ITC on eligible expenditures at 35% to $3m threshold, non-refundable ITC at 15% over $3m, and if qualified corp then can still earn ITC at this 15% over $3m, of which 40% can be refunded.
- Non-refundable ITC at the basic rate of 15% on qualified SR&ED – applied to reduce taxes
- Individuals and Trusts: earn a refundable ITC at base rate of 15%
- If taxable Income of CCPC for previous tax year is >$500k step down limits to $800k apply; >$800k Nil
- If Taxable Capital for CCPC for previous year is $10 to $50 million similar decrease limits apply; >$50m Nil
- If business has associated corporations, this can be applied to above limits; review details
SR&ED Key Projects Eligibility:
- The definition of SR&ED eligible work: means systematic investigation or search that is carried out in a field of science or technology by means of experiment or analysis and that is
- Basic research, work undertaken for advancement of scientific knowledge without a specific application
- Applied Research, work for the advancement of scientific knowledge with application in view
- Experimental dev, towards achieving tech advancement for purpose of creating new, improving existing materials, devices, products or processes, including incremental improvements thereto;
- Also work undertaken by or on behalf of the taxpayer with respect to engineering, design, operations research, mathematical analysis, computer programming, data collection, testing or psychological research, where the work is commensurate with the needs, and directly in support of the work detailed in the above categories.
- DOES NOT INCLUDE: Market Research, Sales promotion, quality control or routine testing, research in the social sciences or humanities, prospecting, commercial production, routine data collection etc.
Funding: Federal and Provincial ITCs, refundable & non-refundable portions.
Turnaround:Based on timeline of filling against when your fiscal year-end seeking coverage was, best to file within 3-months of your tax year with your T2
Key Forms (For Ontario Applicant)
- Form T661, SR&ED Expenditure Claim
- Schedule 31, (T2SCH3)1 – for Corporations
- Schedule 66 (T2 SCH 566): Ontario Innovation Tax Credit
- Schedule 508 (T2 SCH 508): Ontario Research & Development Tax Credit