Form T661 asks you to describe the work and calculate your expenditure. It is the prescribed form for every SR&ED claim, whatever the claimant, and it must be complete and filed by the reporting deadline for the claim to exist. Corporations calculate the credit on Schedule 31. Individuals use Form T2038 (IND). This page walks through the form part by part and explains what reviewers do with each.
What it is
| Part | Content | Who reads it |
|---|---|---|
| Part 1 | Claimant information: name, business number, tax year, contact, whether the claimant is a CCPC | Processing |
| Part 2 | Project information: for each project, title, field of science or technology, start and completion dates, and three narrative questions | Research and Technology Advisor |
| Part 3 | Calculation of SR&ED expenditures: salaries, materials, contracts, third-party payments, overheads or proxy election, capital, and the pool | Financial Reviewer |
| Part 4 | Calculation of qualified expenditures for the credit: the 80% contract adjustment, prescribed proxy amount, assistance and contract payments received | Financial Reviewer |
| Part 5 | Project costs: salaries, materials and contracts by project | Both reviewers |
| Part 6 | Additional project information: who performed the work, their qualifications, and whether the work was done with others | Research and Technology Advisor |
| Parts 7 and 8 | Checklist and certification by an authorised signing officer | Processing |
| Part 9 | Claim preparer information: name, business number and billing arrangement, with a C$1,000 penalty for omission | Risk assessment |
Who it applies to
Every SR&ED claimant: corporations, individuals, trusts and partnerships. Corporations file it with the T2 return and Schedule 31; individuals with the T1 and Form T2038 (IND); partnerships file a T661 and allocate the credit to partners. There is no short form and no threshold below which the narrative questions can be skipped. The claim preparer disclosure applies whenever anyone other than the claimant's own employee is paid to prepare the claim, and the fee arrangement, whether contingent, hourly or fixed, must be stated.
How it works
Part 2, the narrative. Three questions per project, in a fixed order that mirrors the eligibility test. Line 242 asks for the technological uncertainties: what was unknown, why standard practice could not resolve it, what the state of the art was. Line 244 asks for the work performed: the hypotheses, the experiments or analysis, the results and the iterations, in the tax year. Line 246 asks for the advancements achieved or attempted: what was learned, including negative results. The word limits are enforced by the form, so the writing must be dense and specific: name the parameters, the targets, the alternatives tested and the outcomes. The person who did the work should write or closely review it, because the RTA will interview them against it.
Parts 3 and 4, the numbers. Part 3 totals SR&ED expenditures by category and records the method election. Part 4 converts them to qualified expenditures: contract and third-party payments at 80%, the prescribed proxy amount added under the proxy method, and reductions for assistance, contract payments received and provincial credits. The totals flow to Schedule 31, which applies the 35% and 15% rates, the expenditure limit and the refund rules.
Part 5, the bridge. Costs by project let the FR check that the Part 3 totals are supported project by project and that each project's costs match the work the RTA accepted.
Completeness. The CRA checks every T661 for the prescribed information. A form missing Part 2 narratives, Part 5 costs or the certification is incomplete, and if not corrected by the reporting deadline the claim is denied.
Worked example
Illustrative example. Gatineau Optics Inc., a hypothetical CCPC, claims one project for its 2025 tax year. In Part 2 its optical engineer writes that no published coating process achieved below 0.1% reflectance across the 400 to 1,100 nanometre band on the polymer substrate without delamination at 85 degrees Celsius (line 242, 180 words); describes the four deposition parameter sets tested, the adhesion failures in the first two, the revised interlayer hypothesis and the results of the final series (line 244, 520 words); and records that reflectance of 0.08% was achieved with adhesion holding to 80 degrees, so the 85 degree target remains open (line 246, 150 words). Part 3 lists C$300,000 of directly engaged salaries, C$25,000 of materials and a C$50,000 arm's length contract, with the proxy election. Part 4 adds a prescribed proxy amount of C$165,000, takes the contract at C$40,000 and deducts a C$20,000 provincial credit, giving qualified expenditures of C$510,000. Part 5 allocates all costs to the one project. Part 9 names the external preparer and the contingent fee. Schedule 31 calculates a credit of C$178,500, fully refundable.
Common questions
Can we attach a technical report? The CRA does not read attachments as part of the claim; the Part 2 answers are the description. Keep the report for the review.
What if a project spans several years? Describe the work done in the tax year being claimed, with enough context from earlier years for the uncertainty to make sense.
Who signs? An authorised officer of the claimant. The preparer signs nothing but must be disclosed in Part 9.
Can we file the T661 after the return? Yes, as an amendment, provided it is within the reporting deadline. Filing with the return starts the refund clock sooner.
Related pages
Official sources
Educational content only, not tax advice. See the disclaimer.