How to file an SR&ED claim: a step-by-step T661 guide for 2026

This is an independent guide. ClearSRED is not affiliated with the Canada Revenue Agency. It explains the process; it is not tax advice for your specific situation.

SR&ED filing facts at a glance (as of October 2026)

Who can claim SR&ED?

Canadian businesses that carry out eligible SR&ED in Canada can claim: corporations, individuals with a business, trusts, and members of partnerships. Corporations claim on their T2 with Schedule 31; individuals and trusts use Form T2038(IND).

The rate depends on who you are. A Canadian-controlled private corporation (CCPC) can earn the enhanced 35% credit on up to $6 million of qualified expenditures, much of it refundable as cash. Other corporations generally earn 15%, which reduces tax payable. Bill C-15 also extended the enhanced credit to eligible Canadian public corporations. See the 2026 SR&ED expenditure limit for the phase-out rules.

Does your work qualify for SR&ED?

Work qualifies if it was done in Canada, aimed at advancing scientific knowledge or achieving a technological advancement, and was a systematic investigation carried out by experiment or analysis. The CRA's current guidelines call these the "why" and "how" requirements.

Many practitioners still test projects against the five questions from the CRA's 2015 eligibility policy, which the CRA has since archived. They are no longer official guidance, but they map neatly onto the T661:

1. Was there a scientific or technological uncertainty?
2. Did the work involve formulating hypotheses aimed at reducing that uncertainty?
3. Was the approach a systematic investigation, testing hypotheses by experiment or analysis?
4. Was it aimed at a scientific or technological advancement?
5. Was a record of the hypotheses and results kept as the work progressed?

If any answer is no, that work probably isn't SR&ED. Market research, routine quality control, social science research and training are excluded. Run your projects through our SR&ED eligibility check, and if you build software, read SR&ED for software development.

How do you file an SR&ED claim, step by step?

Work through these eight steps in order. The technical story comes first, because the expenditures you claim must follow from the projects you describe.

1. Confirm the work is eligible

   Apply the why and how requirements above to each body of work. Leave out routine development, even if it was hard or time-consuming.

2. Identify and define your projects

   Group the year's work into projects, each built around a specific technological uncertainty. Note the start date (when the uncertainty was identified and work to resolve it began), the field of science code from Guide T4088, and who worked on it. You complete a separate Part 2 for each project; the CRA lets you submit Part 2 for only your 20 largest projects by dollar value, but it may ask for the rest.

3. Gather contemporaneous evidence

   Collect records created while the work happened: plans, design documents, source code and commit history, test data, meeting notes, progress reports and time records. Guide T4088 says work with no relevant supporting evidence will likely be disallowed.

4. Write the Part 2 project descriptions

   Answer Section B for each project within the limits printed on the form. Line 242 asks what scientific or technological uncertainty you tried to overcome (maximum 350 words). Line 244 asks what work you performed in the tax year to overcome it, summarizing the systematic investigation (maximum 700 words). Line 246 asks what advancement you achieved or attempted (maximum 350 words). Use plain technical language and specifics: what you tried, what failed, what you learned. If the project had pre-claim approval, tick line 212 and enter the case number on line 214.

5. Calculate expenditures in Part 3

   First choose your overhead method. The proxy method (line 160) replaces most overhead with a prescribed proxy amount of 55% of the salary base for employees directly engaged in SR&ED, and you complete Part 5. The traditional method (line 162) means claiming actual overhead directly related to SR&ED, which requires more tracking. The choice cannot be changed for the year once the T661 is filed. Then total salaries, materials consumed or transformed, contracts, third-party payments and, for property acquired after December 15, 2024, eligible capital.

6. Calculate the credit on Schedule 31

   Schedule 31 turns qualified expenditures into the investment tax credit: the enhanced 35% rate (up to the expenditure limit) or the 15% rate, and the refundable portion. Make sure the totals tie back to your T661, payroll and financial statements.

7. Complete provincial forms

   Most provinces offer their own R&D credit, claimed on a provincial schedule or return. Provincial credits count as government assistance and reduce your federal qualified expenditures, so work them out before finalizing federal figures. See provincial SR&ED tax credits.

8. Complete Part 9 and file with your T2

   Disclose any paid claim preparer, then have an authorized signing officer certify the form. File the T661, Schedule 31 and provincial forms with your T2, or with an amended return, before the reporting deadline.

Should you apply for pre-claim approval first?

For planned work, possibly. Since April 1, 2026, businesses with gross income under $25 million can ask the CRA to confirm a project's technical eligibility before or soon after it starts, using Form T1322. Approved projects are flagged on T661 line 212, and if a claim with only approved projects is reviewed, the CRA's service standard is 90 days instead of 180. Pre-claim approval does not extend the reporting deadline. Read the pre-claim approval overview and our T1322 walkthrough.

What is the SR&ED filing deadline?

The SR&ED reporting deadline is 12 months after your income tax return's filing due date. A corporation's T2 is due six months after year-end, so a corporation has about 18 months from the end of the tax year in which it incurred the expenditures. Individuals with a business have about 17.5 months.

Example: a corporation with a December 31, 2025 year-end has a T2 filing due date of June 30, 2026. Its SR&ED reporting deadline for 2025 expenditures is June 30, 2027.

There are no extensions. The CRA's Filing Requirements Policy says it "cannot by law allow any additional time" (Income Tax Act s. 220(2.2)), and you cannot file or change an SR&ED claim after the deadline. Filing only the T661 on time gives you the deduction but no tax credit; filing only Schedule 31 gives you neither.

The CRA advises filing the claim with your return rather than waiting. Work out your own date with our SR&ED deadline calculator.

What is T661 Part 9, and what is the $1,000 penalty?

Part 9 asks whether anyone was paid to prepare or help prepare the claim. If so, you list each preparer's name and business number, the billing arrangement (for example a percentage of the credit, hourly, or a flat fee), the rate, and the total fee paid or payable. Employees preparing the claim as part of their job don't count as claim preparers.

A $1,000 penalty may apply to each claim where this information is missing, incomplete or inaccurate, and the preparer is jointly liable with the claimant. Part 9 is not subject to the reporting deadline, so a mistake there won't disallow the claim, but get it right. Be wary of any preparer who suggests leaving it blank.

What happens after you file?

The CRA risk-assesses every claim. Most are processed as filed; some are selected for a technical review, a financial review, or both. For refundable claims, the CRA's service standards are:

• 60 days if accepted as filed.
• 90 days if selected for review and every project had pre-claim approval.
• 180 days if selected for review and any project lacked pre-claim approval or differs materially from what was approved.

The clock starts once the CRA has both your complete claim and your tax return. Non-refundable claims have no service standard. In a review, a research and technology advisor or financial reviewer may meet with your team and ask for records. Read what to expect in an SR&ED review.

Tips for a first-time SR&ED claim

If this is your first claim, or you haven't claimed in the past three years, the CRA may select you for its mandatory First-Time Claimant Advisory Service. It is guidance for future claims, not a penalty, but prepare for it.

• Start with the uncertainty, not the product. Reviewers look for what was technically unknown, not what you shipped.
• Use what you already have. Commit history, tickets, pull request discussions and test logs are often good evidence. Guide T4088 says limited documentation shouldn't stop a first claim; ask the CRA about other acceptable evidence.
• Be conservative with time allocations. Base them on records, not round-number estimates.
• Prefer the proxy method unless you already track overhead by project. It is simpler to support.
• Set up tracking now for next year: tag SR&ED tickets, log experiments, and record time by project.
• Know your deadline and leave room before it.

What are the most common SR&ED filing mistakes?

• Describing features or business goals instead of a technological uncertainty.
• Narratives with no evidence behind them. Work without supporting records is likely to be disallowed.
• Claiming routine work, such as standard integration, bug fixing or debugging that uses known methods.
• Figures that don't reconcile between the T661, Schedule 31, payroll and financial statements.
• Forgetting that provincial credits reduce federal qualified expenditures.
• Exceeding word limits or padding with marketing language.
• Incomplete Part 9 disclosure, which risks the $1,000 penalty.
• Missing the reporting deadline. It cannot be extended.

What changed for SR&ED filing in 2026?

Bill C-15 received Royal Assent on March 26, 2026, raising the enhanced expenditure limit to $6 million and restoring capital expenditures for property acquired after December 15, 2024. The CRA revised Form T661 on May 15, 2026 to reflect these changes, adding the pre-claim approval flag (lines 212 and 214) and lines for capital property. The CRA says Guide T4088 is being revised; until it is, check the interim instructions on its SR&ED updates page.

1. CRA: Guide T4088, Guide to Form T661
2. CRA: Form T661 (form page)
3. CRA: Form T661 (2026), PDF
4. CRA: SR&ED Filing Requirements Policy
5. CRA: What work is eligible
6. CRA: Eligibility of Work policy (2015, archived), five questions
7. CRA: Prescribed Proxy Amount Policy
8. CRA: SR&ED news and updates
9. CRA: Investment Tax Credit Policy
10. CRA: After you claim SR&ED
11. CRA: When to file your corporation income tax return
12. CRA: Apply for pre-claim approval