How to apply for SR&ED tax incentives - Video 4

Transcript

Welcome to video four of this series.

In this video, I'll tell you how to claim your SR&ED expenditures and your investment tax credit.

Whether you're a corporation, or an individual who carries on a business, you have to complete and file Form T661 if you want to claim SR&ED expenditures.

Use this form to provide technical information about your SR&ED projects, calculate your SR&ED expenditures, and calculate the SR&ED expenditures that qualify for an investment tax credit.

To claim your investment tax credit, you also have to file either Form T2038, Investment Tax Credit for Individuals, or Schedule T2SCH31, Investment Tax Credit for Corporations, along with form T661.

It's good practice to file your SR&ED forms at the same time that you file your income tax return.

So, let's talk about filling out Form T661, the SR&ED claim.

First, you'll probably want to have a look at the guide to Form T661. It has information and clear instructions to help you complete the form.

Form T661 has 10 parts that can be grouped into five components: general information, project information, financial information, statistical information, and certifications.

So let's start with the easy part, part 1. Here you fill out your general information, such as identification and contact information.

Part 2 - Project information. Here, things get a bit more interesting. You provide detailed information about the scientific or technological content of your work.

You'll need to complete a separate Part 2 for each project you're claiming.

Now we're into your SR&ED expenditures and your investment tax credit.

In video three I talked about what expenditures qualify for SR&ED. In Part 3 of the form, you'll calculate your deductible expenditures for the purpose of calculating your net income.

In Part 4, you'll calculate the expenditures that qualify for your investment tax credit.

If you chose the proxy method to calculate your overhead and other expenditures, you'll calculate your prescribed proxy amount in Part 5 of the form.

You'll use Part 6 to break down the costs for each project you're claiming in the year.

Only three more steps and we're done.

Fill out Part 7. The information you provide here helps the Government develop valuable statistics about the type of R&D work done in Canada.

Go over the checklist in Part 8 to make sure that your claim is complete before filing it.

Then you provide information about your claim preparer in Part 9, and sign parts 9 and 10 to certify that all your information is true, correct, and complete.

That's it! You're done!

It's been a pleasure helping you to better understand how the SR&ED tax incentive program can work for you.

To find out more about the SR&ED program, check out the policies, services, and tools at www.cra.gc.ca/sred.

You can also attend free SR&ED information seminars. Thanks for watching!

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