File Your SR&ED Claim on Time

Your SR&ED tax credit claim must be filed within 18 months of your corporation's fiscal year-end — this is a hard CRA deadline with no extensions. Missing this window permanently forfeits your refundable SR&ED investment tax credit for that year. File Form T661 alongside your T2 return to lock in every eligible dollar.

Capture the 35% Refundable Rate

Canadian-controlled private corporations can claim a 35% refundable SR&ED investment tax credit on the first $3 million in qualified R&D expenditures. Above that threshold, the SR&ED credit drops to 15% and becomes non-refundable. Structuring your SR&ED claim to maximize the refundable portion under ITA section 127.3 puts cash directly back into your business.

Track Developer Time Contemporaneously

CRA requires contemporaneous documentation — time logs, project notes, and weekly records — to support your SR&ED claim. Reconstructing developer hours after year-end is the single most common reason CRA reduces or denies SR&ED credits during review. Set up weekly time tracking from day one so your SR&ED claim documentation is audit-ready.

Separate SR&ED from Routine Work

CRA distinguishes between eligible SR&ED activities and routine engineering, quality control, or commercial development. Your SR&ED claim must isolate time spent on technological uncertainty and systematic investigation from standard product work. Mixing these on Form T661 triggers CRA review and reduces the eligible SR&ED expenditure pool.

Reduce IRAP from Your Claim

Government assistance received — IRAP grants, NSERC funding, Ontario Innovation Tax Credit — must reduce the cost base of related SR&ED expenditures on your claim. Failing to subtract IRAP contributions from your SR&ED-eligible costs results in an overstated claim that CRA claws back during review, plus interest on the overclaimed SR&ED credit amount.

Include All Eligible Salary Costs

Your SR&ED claim should capture the full cost of employees directly engaged in R&D — gross wages, employer CPP, EI premiums, and taxable benefits — not just base salary. Many companies understate their SR&ED eligible labour by excluding statutory contributions, leaving thousands in unclaimed SR&ED tax credits on the table every year.

Claim Materials Consumed in R&D

Materials and supplies consumed or transformed during SR&ED activities are eligible expenditures on your claim. If your R&D process uses raw materials, prototypes, or test components that are destroyed or altered during experimentation, include these costs on Form T661. Materials used in production after the SR&ED phase ends are not eligible.

Document Technological Uncertainty

Every SR&ED claim project on Form T661 must describe the specific technological uncertainty your team faced — what you did not know and could not determine through standard practice. CRA reviewers reject SR&ED claims where the technical narrative reads as a project summary instead of identifying the specific uncertainty and the systematic approach taken to resolve it.

Stack Ontario Innovation Tax Credit

Ontario CCPCs can claim the Ontario Innovation Tax Credit at 8% on top of the federal SR&ED credit, applied to the same eligible R&D expenditures. Your SR&ED claim preparation should calculate both federal and provincial credits together on your T2 return so you recover the maximum combined SR&ED tax credit — up to 43% on qualified spending.

File Retroactive SR&ED Claims

If your company performed qualifying R&D in prior years but never filed an SR&ED claim, you can still submit Form T661 for any fiscal year within the 18-month filing window. Each unclaimed SR&ED year represents tens of thousands in forfeited refundable credits. Review your prior two fiscal years immediately to determine if retroactive SR&ED claims are still eligible.