Canada has no registration step. The claim is made with the income tax return: Form T661 describes the SR&ED work and calculates the expenditure, Schedule 31 calculates the investment tax credit for a corporation, and both must be filed no later than 12 months after the filing due date of the return. Since 1 April 2026 a company can also ask the CRA for optional pre-claim approval of planned work. This page follows the steps from planning to assessment.
Before you start
- Identify the projects. The CRA assesses SR&ED by project, each defined by a technological objective, the uncertainty faced and the work done. Group the year's work into projects on that basis, not by customer or product line.
- Answer the two questions for each project. Why: what scientific or technological uncertainty existed? How: what systematic investigation was carried out? If either has no answer, the project is not SR&ED.
- Choose the overhead method. Proxy or traditional. The election to use the proxy method is made on Form T661 and, once made, is irrevocable for that tax year.
- Check the claimant's status. CCPC status, taxable capital of the associated group and the expenditure limit decide the enhanced rate and refund.
- Consider pre-claim approval. Optional, and available since 1 April 2026, to have planned work assessed before you incur most of the cost. It suits large or novel projects and first-time claimants.
Step by step
- Apply for pre-claim approval, if you want it. The CRA reviews the planned work and gives a decision on its eligibility before the claim is filed.
- Complete Form T661. Part 1 identifies the claimant; Part 2 describes each project, with the technological uncertainties, the work done and the advancements, in a fixed word limit per question; Part 3 calculates SR&ED expenditures by category and the pool; Part 4 calculates qualified expenditures for the credit; Part 5 gives project costs; Part 6 covers project information such as who did the work; Part 9 identifies any claim preparer and their fee arrangement. The Form T661 page walks through it.
- Complete Schedule 31. Corporations calculate the credit on Schedule T2SCH31, including the enhanced rate on expenditures within the limit, the refundable portion and any carryback or carryforward. Individuals use Form T2038 (IND).
- File with the T2 return. Electronically, with the return or as an amendment to it. The reporting deadline is 12 months after the return's filing due date; a return is due 6 months after year end, so the SR&ED deadline is 18 months after year end.
- Respond to any review. The CRA may accept the claim as filed or select it for a financial or technical review before assessing.
- Keep the records for at least 6 years from the end of the tax year.
Forms and channels
| Form | Who | Purpose | Deadline |
|---|---|---|---|
| Pre-claim approval application | Optional, any claimant | CRA decision on eligibility of planned work before the claim | Before the work is largely incurred |
| Form T661 | All claimants | Project descriptions and expenditure calculation | Reporting deadline: 12 months after the return filing due date |
| Schedule T2SCH31 | Corporations | Investment tax credit calculation | Same |
| Form T2038 (IND) | Individuals | Investment tax credit calculation | Same |
| Provincial schedules | Corporations in provinces with credits | Provincial R&D credits, mostly administered by the CRA with the T2 | Varies |
| T2 return | Corporations | The return the claim travels with | 6 months after year end |
Claims are filed electronically through certified tax software. The T661 must be complete: a form missing prescribed information is not a valid claim, and if the deficiency is not corrected by the reporting deadline the claim fails.
After filing
Processing. The CRA sets service standards for processing: refundable claims within 60 calendar days of receiving a complete claim where no review is needed, and within 180 days where a review is selected; non-refundable claims within a year.
Review. A claim may be selected for a financial review, a technical review or both; a Research and Technology Advisor assesses the projects and a Financial Reviewer the expenditures. The CRA reviews page describes the process.
Assessment. The credit reduces Part I tax, and the refundable portion is paid with the notice of assessment. Unused non-refundable credit is carried back 3 years or forward 20 years. The SR&ED expenditure pool is deducted in the year or carried forward indefinitely at the company's choice.
Illustrative example
Illustrative example. Cabot Robotics Inc., a hypothetical CCPC with a 31 December 2025 year end, claims for the first time.
| When | What Cabot does |
|---|---|
| During 2025 | Engineers log time by project and keep test records; finance tags materials and contractor invoices |
| February 2026 | Identifies two projects that answer the Why and How questions; elects the proxy method |
| By 30 June 2026 | Files the T2 return with Form T661 and Schedule 31 claiming C$500,000 of qualified expenditures at 35%, a credit of C$175,000 |
| By 30 June 2027 | Reporting deadline: the last date to file or complete the claim |
| August 2026 | The CRA accepts the claim as filed and pays the C$175,000 refund with the notice of assessment |
| To end of 2031 | Records retained |
Had Cabot found the projects in September 2027, the reporting deadline would have passed and the credit would have been lost.
Related pages
Official sources
Educational content only, not tax advice. See the disclaimer.