SR&ED Filing Requirements Policy

Date: November 26, 2020

1.0 Purpose

The purpose of this document is to clarify the position of the Canada Revenue Agency (CRA) regarding filing requirements when administering the scientific research and experimental development (SR&ED) legislation under the federal Income Tax Act and the Income Tax Regulations.

1.1 Overview

The SR&ED program provides the following two tax incentives:

• SR&ED expenditures can be claimed as part of the pool of deductible SR&ED expenditures to reduce income for tax purposes in the current tax year or carried forward to reduce income of future tax years;
• a taxpayer can receive SR&ED investment tax credits (ITCs) on qualified SR&ED expenditures in the form of a cash refund, a reduction of tax payable, or both depending on the circumstances. Unused SR&ED ITCs may be carried back or carried forward. For more information on ITC, refer to the SR&ED Investment Tax Credit Policy.

To make an SR&ED claim for these tax incentives, certain filing requirements must be met. To access the incentives for SR&ED work carried on in Canada in the year, a person must complete certain prescribed forms (see section 3.0) (when the claimant of SR&ED expenditures is a partnership, see section 6.5) and submit these forms containing the prescribed information (see section 4.0) in respect of an expenditure, and the ITC earned on the expenditure, by the SR&ED reporting deadline (see section 6.1). The SR&ED reporting deadline is 12-months after the filing due date for a return (see section 5.0), which is dependent on the type of taxpayer. For example, the SR&ED reporting deadline for corporations is generally 18-months after the tax year end. The SR&ED filing requirements apply to any original or amended prescribed form for SR&ED (see section 7.0 and section 8.0). Specific forms or schedules must be filed to claim provincial or territorial R&D tax credits (see section 10.0).

2.0 Legislation and interpretation

2.1 Filing requirements for deducting an allowable SR&ED expenditure

In order to be able to deduct an SR&ED expenditure in the calculation of net income for tax purposes, a claimant must have identified the expenditure on the prescribed form (see section 3.1) containing the prescribed information (see section 4.1) in respect of the expenditure, on or before the day that is 12 months after the claimant's income tax return filing due date (see section 5.0) for the year in which the expenditure was incurred.

The prescribed form identifying SR&ED expenditures should be filed with an income tax return for the year (when the claimant of SR&ED expenditures is a partnership, see section 6.5). If the claimant has not met the filing requirements, then the expenditures are not considered to be SR&ED expenditures.

Although the claimant has an additional 12 months after the income tax return filing due date for the year, the claimant is advised to file the prescribed form for SR&ED expenditures, on or before the filing due date of the income tax return.

Legislative References Income Tax Act
Subsection 37(11) Filing requirement
Subsection 37(12) Misclassified expenditures

2.2 Filing requirements for earning an investment tax credit on an SR&ED expenditure

In order to earn an ITC, a claimant must file a prescribed form (see section 3.2) containing prescribed information (see sections 4.2 to 4.3) in respect of an ITC amount, earned on an outlay, expense, or expenditure for SR&ED, on or before the day that is 12 months after the claimant's income tax return filing due date (see section 5.0) for the year in which the expenditure was incurred.

A claimant must have met the filing requirements for SR&ED expenditures before an ITC can be earned on such expenditures (members of a partnership claiming SR&ED ITC see section 6.5). The prescribed form identifying the ITC earned on SR&ED expenditures should also be filed with an income tax return for the year. If the claimant does not meet the filing requirements, they do not earn the ITC.

Although the claimant has an additional 12 months after the income tax return filing due date for the year, the claimant is advised to file the prescribed form identifying the ITC earned, on or before the filing due date of the income tax return.

Legislative References Income Tax Act
Subsection 127(9) Definition of "investment tax credit", paragraph (m)
Subsection 127(9) Definition of "qualified expenditure"

3.0 Prescribed forms for an SR&ED claim

An SR&ED claim for the year should be filed with an income tax return for the year. When the claimant of SR&ED expenditures is a partnership, refer to section 6.5. Tax returns, T1, Income Tax and Benefit Return, T2, Corporation Income Tax Return, and T3, Trust Income Tax and Information Return are prescribed forms. For more information on the filing of an income tax return, refer to section 5.0.

3.1 Prescribed form for SR&ED expenditures

Form T661, Scientific Research and Experimental Development (SR&ED) Expenditures Claim is the prescribed form for the purposes of determining the pool of deductible SR&ED expenditures and qualified SR&ED expenditures.

The following is a list of other prescribed forms that supplement Form T661 and may apply depending on the situation:

• Form T1145, Agreement to Allocate Assistance for SR&ED Between Persons Not Dealing at Arm's Length (see section 9.1)
• Form T1146, Agreement to Transfer Qualified Expenditures Incurred in Respect of SR&ED Contracts Between Persons Not Dealing at Arm's Length (see section 9.2)
• Form T1174, Agreement Between Associated Corporations to Allocate Salary or Wages of Specified Employees for Scientific Research and Experimental Development (SR&ED) (see section 9.3)
• Form T1263, Third-Party Payments for Scientific Research and Experimental Development SR&ED) (see section 9.4)

Legislative References Income Tax Act
Subsection 37(1) Pool of deductible SR&ED expenditures
Subparagraphs 37(1)(a)(ii) & (iii) Pool of deductible SR&ED expenditures – Payments to certain third parties
Subsection 37(9.3) Agreement among associated corporations
Subsection 37(11) Filing requirement
Subsection 127(13) Agreement to transfer qualified expenditures
Subsection 127(20) Agreement to allocate

3.2 Prescribed forms for investment tax credit

3.2.1 Investment tax credit for corporations

Schedule T2SCH31, Investment Tax Credit – Corporations is the prescribed form for corporations.

Schedule T2SCH49, Agreement Among Associated Canadian-Controlled Private Corporations to Allocate the Expenditure Limit is a prescribed form that supplements Schedule T2SCH31 and may apply depending on the situation. For more information on Schedule T2SCH49, refer to section 9.5.

Legislative Reference Income Tax Act
Subsection 127(9) Definition of "investment tax credit", paragraph (m)
Subsection 127(10.3) Associated corporations

3.2.2 Investment tax credit for individuals or trusts

Form T2038(IND) Investment Tax Credit (Individuals) is the prescribed form for individuals and trusts.

Legislative Reference Income Tax Act
Subsection 127(9) Definition of "investment tax credit", paragraph (m)

4.0 Prescribed information

Prescribed information is the information to be provided on a form or the manner of filing a form as authorized by the Minister of National Revenue.

For Form T661, Schedule T2SCH31, and Form T2038(IND), prescribed information means the information requested on the prescribed form. Prescribed information will also include any attachments or schedules necessary to provide the information requested on Form T661, including, if applicable, forms T1145, T1146, T1174, and T1263, or in case of Schedule T2SCH31, Schedule T2SCH49.

Legislative Reference Income Tax Act
Subsection 248(1) Definition of "prescribed"

4.1 Prescribed information – Form T661, Scientific Research and Experimental Development (SR&ED) Expenditures Claim

A claimant should provide the information requested in the following parts of Form T661:

• Part 1 – General information.
• Part 2 – Project information: Sections A to C.
  This part requests the technical information about the work claimed through a series of fields, check boxes, and questions. A separate complete Part 2 is required for each project being claimed.
  Claimants may choose to submit project information in Part 2 of the form for only the 20 largest projects in dollar value when filing a claim. The cost of every project claimed is required to be included in Part 6 (see below) of the Form T661. All claimants must ensure that they complete and maintain, at their place of business, a Part 2 of Form T661 for all projects claimed, and not only for the 20 largest projects. Upon request, claimants should be prepared to submit to the CRA a complete Part 2 of the form for any, or all, of the projects claimed. Failure to provide this information will result in the disallowance of all amounts claimed for the project as SR&ED expenditures.
• Part 3 – Calculation of SR&ED expenditures: Sections A to C.
  Expenditures should be claimed on the appropriate lines of Form T661.
• Part 4 – Calculation of qualified SR&ED expenditures for ITC purposes.
• Part 5 – Calculation of prescribed proxy amount (PPA): Sections A and B (if elected to use the proxy method).
• Part 6 – Project costs. Information requested in this part must be provided for all SR&ED projects claimed in the year. Expenditures should be recorded and allocated on a project basis.
• Part 7 – Additional information.
• Part 8 – Claim checklist.
• Part 9 – Claim preparer information. Information requested in this part must be provided for each claim preparer that has accepted consideration to prepare or assist in the preparation of the SR&ED claim.
  A $1,000 penalty may be assessed if the prescribed information requested about the claim preparer(s) and billing arrangement(s) is missing, incomplete, or inaccurate. Where a claim preparer has prepared or assisted in the preparation of the SR&ED form, the claimant and the claim preparer will be jointly and severally, or solidarily, liable for the penalty. The SR&ED claim will not be disallowed if any of the information in Part 9 is missing, incomplete, or inaccurate, however a penalty may be assessed.
• Part 10 – Certification; name of authorized signing officer of the corporation, or individual and name of person / firm who completed the form.

During the review of the claim, the CRA may request additional information for clarification and confirmation purposes, even though a submission has met the SR&ED filing requirements.

For instructions on how to complete the various parts of Form T661, refer to T4088 Guide to Form T661 – Scientific Research and Experimental Development (SR&ED) Expenditures Claim.

Form T661 includes fields for all prescribed information, including the project information in Part 2 of the Form. As a result, claimants using tax preparation software must not also submit paper copies of Form T661.

4.2 Prescribed information – Schedule T2SCH31, Investment Tax Credit – Corporations

Corporations claiming for an SR&ED ITC must provide the corporation's name, business number, tax year end, and the relevant information requested in parts 2, 3, 8 to 17, 29 and 30 of Schedule T2SCH31.

4.3 Prescribed information – Form T2038(IND), Investment Tax Credit (Individuals)

Individuals or trusts claiming for an SR&ED ITC must provide the SR&ED-related information requested in parts A to F of Form T2038(IND).

5.0 Filing due date for a return

For changes to deadlines because of the COVID-19 pandemic see Appendix A.

A claimant's income tax return filing due date for a tax year is the day the claimant's income tax return under Part I of the Income Tax Act is required to be filed for the year or would be required to be filed, if tax under Part I of the Act was payable by the claimant. The returns and their corresponding SR&ED reporting deadlines are as follows:

To avoid interest and penalties, an income tax return should be filed by the filing due date. An SR&ED claim, should be included with this filing, even though the usual SR&ED reporting deadline is 12 months after the tax return filing due date.

In general, a taxpayer can request changes to their return up to three or four years (depending on the type of taxpayer or type of corporation) from the date of the original notice of assessment for the year, except no change can be made to an SR&ED claim after the SR&ED reporting deadline (see section 6.0). For information on how to request a reassessment to include or amend information on a return, refer to the guide for the appropriate return.

An amount cannot be considered an SR&ED expenditure if it has not been included with the prescribed information (see section 4.0) in respect of the expenditure on Form T661 and filed to the CRA by the SR&ED reporting deadline. Furthermore, an amount cannot be considered an ITC if the expenditure on which the ITC is based is not an SR&ED expenditure (because it was not identified on Form T661 by the reporting deadline) or if the ITC amount calculated on the expenditure has not been included on Schedule T2SCH31 or Form T2038(IND) and filed to the CRA by the SR&ED reporting deadline (the Time Limits and Other Periods Act (COVID-19) allows for the temporary extension of some SR&ED reporting deadlines, see Appendix A). If an SR&ED claim is filed with a return for the year (on or before the filing due date for the return), then the claimant has up to the SR&ED reporting deadline to request changes to the expenditures claimed.

Legislative References Income Tax Act
Subsection 150(1) Filing returns of income – General rule
Paragraph 150(1)(a) Filing returns of income – Corporations
Paragraph 150(1)(c) Filing returns of income – Trusts and estates
Subparagraph 150(1)(d)(ii) Filing returns of income – Individuals
Subsection 248(1) Definition of "filing due date"

6.0 Determining the reporting deadline for an SR&ED claim

For changes to deadlines because of the COVID-19 pandemic see Appendix A.

6.1 SR&ED reporting deadline

A claimant's SR&ED reporting deadline is the last day for which a prescribed form containing prescribed information (see section 4.0) in respect of the expenditure or ITC is required to be filed:

• the reporting deadline to file Form T661 for an SR&ED expenditure is 12 months after the claimant's filing due date (see section 5.0) for the year in which the expenditure was incurred; and
• the reporting deadline to include an ITC earned in respect of an SR&ED expenditure on Schedule T2SCH31 or Form T2038(IND) is also 12 months after the claimant's filing due date for the year in which the expenditure was incurred.

For an illustration of the difference between the filing due date of a return and the SR&ED reporting deadline, refer to section 5.0.

If the SR&ED reporting deadline happens to fall on a Saturday, Sunday, or a public holiday recognized by the CRA, the filing deadline is extended to the next business day. Some recognized public holidays are specific to a province or territory. For a detailed listing of public holidays recognized by the CRA, refer to the CRA web site.

Legislative References Income Tax Act
Subsection 37(11) Filing requirement
Subsection 127(9) Definition of "investment tax credit"

6.2 Individuals

The tax year of an individual is defined as the calendar year. In general, an individual who carried on a business in the year is required to file an income tax return on or before June 15 of the following year (see section 5.0):

• An individual's SR&ED reporting deadline (see section 6.1) is 12 months after the filing due date of the income tax return.
• Therefore, an individual will have up to 17 ½ months after the end of the tax year in which an SR&ED expenditure was incurred to include the SR&ED expenditure with the prescribed information (see section 4.0) in respect of the expenditure on Form T661 and to include the ITC amount earned on the expenditure on Form T2038(IND) for the tax year.
• The Form T661 and Form T2038(IND) are forms that constitute part of the individual's tax return and should be filed with the T1, Income Tax and Benefit Return.

Legislative References Income Tax Act
Subsection 37(11) Filing requirement
Subsection 127(9) Definition of "investment tax credit"
Subparagraph 150(1)(d)(ii) Filing returns of income – Individuals
Paragraph 249(1)(b) Definition of "tax year" – Individuals

Example

An individual with a business has a tax year ending on December 31, 2017. The income tax return filing due date would be June 15, 2018. The individual would have until June 15, 2019, to file or make changes to the prescribed information in respect of an expenditure on Form T661 and to include the ITC amount in respect of the expenditure on Form T2038(IND), for the December 31, 2017, income tax return.

6.3 Corporations

A corporation’s filing due date to file a T2, Corporate Income Tax Return is six months after the end of the tax year (see section 5.0):

• The corporation's SR&ED reporting deadline (see section 6.1) for SR&ED expenditures is 12 months after the corporation's filing due date.
• A corporation will have up to 18 months after the end of the tax year in which an SR&ED expenditure was incurred to include an SR&ED expenditure with the prescribed information (see section 4.0) in respect of the expenditure on Form T661 and to include the ITC amount earned on the expenditure on Schedule T2SCH31 for the tax year.
• The Form T661 and Schedule T2SCH31 comprise part of the T2 return and should be filed with the  T2 return.

Legislative References Income Tax Act
Subsection 37(11) Filing requirement
Subsection 127(9) Definition of "investment tax credit"
Paragraph 150(1)(a) Filing returns of income – Corporations
Paragraph 249(1)(a) Definition of "tax year" – Corporations

Example

A corporation's tax year end is March 31, 2017. The income tax return filing due date would be September 30, 2017. The corporation would have until September 30, 2018, to file or make changes to the prescribed information in respect of an expenditure on Form T661 and to include the ITC amount in respect of the expenditure on Schedule T2SCH31, for the March 31, 2017, income tax return.

6.3.1 Non-profit SR&ED corporation

A non-profit SR&ED corporation's SR&ED reporting deadline for expenditures is its filing due date (see section 5.0) for the income tax return. This means a non-profit SR&ED corporation has up to six months after the end of the tax year in which an SR&ED expenditure was incurred to include the SR&ED expenditure with the prescribed information (see section 4.0) in respect of the expenditure on Form T661, or it will be subject to a penalty. A non-profit SR&ED corporation cannot claim an ITC. For information on a non-profit SR&ED corporation, refer to the Third-Party Payments Policy.

Legislative References Income Tax Act
Paragraph 149(1)(j) Non-profit corporations for SR&ED
Subsection 149(7) Time for filing
Subsection 149(7.1) Penalty for failure to file on time
Paragraph 150(1)(a) Filing returns of income – Corporations

6.4 Trusts

The tax year of a trust (except a testamentary trust follows the same rules as individuals) is the same as for individuals and is defined as a calendar year. In general, a trust (except a testamentary trust) is required to file an income tax return within 90 days after the end of the tax year (see section 5.0):

• A trust's SR&ED reporting deadline (see section 6.1) is 12 months after the filing due date (see section 5.0).
• Therefore, a trust (except a testamentary trust) will have up to 15 months after the end of the tax year in which an SR&ED expenditure was incurred to include an SR&ED expenditure with the prescribed information (see section 4.0) in respect of the expenditure on Form T661 and to include the ITC amount earned on the expenditure on Form T2038(IND).
• The Form T661 and Form T2038(IND) are forms that constitute part of the trust's tax return and they should be filed with the T3, Trust Income Tax and Information Return.

Legislative References Income Tax Act
Subsection 37(11) Filing requirement
Subsection 104(2) Trusts taxed as individual
Subsection 127(9) Definition of "investment tax credit"
Paragraph 150(1)(c) Filing returns of income – Trusts and estates
Paragraph 249(1)(b) Definition of "tax year" – Individuals

Example

A trust with a business has a tax year end on December 31, 2017. Their income tax return filing due date would be March 31, 2018. The trust would have until March 31, 2019, to file or make changes to the prescribed information in respect of an expenditure on Form T661 and to include the ITC amount in respect of the expenditure on Form T2038(IND), for the December 31, 2017, tax return.

6.5 Members of a partnership

In calculating a partner's (member of a partnership) share of income or loss from a partnership in a tax year, the partnership must claim all the available pool of deductible SR&ED expenditures in the year. Since the available SR&ED expenditure pool is deducted at the partnership level, a member will not be able to make a separate deduction for the SR&ED expenditures.

A partnership cannot claim an ITC since it does not file a tax return. The members must file a tax return to pay tax or receive a benefit. However, there is a mechanism for the partnership to allocate the ITC to its members. For information on partnerships and SR&ED, refer to the SR&ED Claims for Partnerships Policy.

For most partnership arrangements, the partnership must file a Partnership Information Return (T5013 forms). The partnership should file the partnership Form T661 with the Partnership Information Return (T5013 forms). The partnership Form T661 should be filed no later than 12 months after the earliest of all filing due dates for the return of income of the members (each member’s income tax return deadline) for the tax year in which the partnership’s fiscal period ends. A member can file the partnership Form T661 on behalf of the partnership but the SR&ED claim will not be processed unless a Partnership Information Return (T5013 forms), which agrees with the Form T661, has been filed.

For claimants who are members of a partnership and where the partnership Form T661 has been filed with the Partnership Information Return (T5013 forms), each member’s SR&ED ITC reporting deadline is based on its tax year-end. Each member of a partnership must file a prescribed form (Schedule T2SCH31 or Form T2038(IND)) by their respective reporting deadline for claiming an ITC in order to claim the ITC allocated from the partnership (see sections 6.1 to 6.4 for information on SR&ED ITC reporting deadline).

In the situation where the partnership is exempted from filing a Partnership Information Return (T5013 forms) and chooses not to file one, each member’s reporting deadline is based on the member’s tax year in relation to the partnership's fiscal year in which the expenditure in question was incurred, refer to T4068, Guide for the Partnership Information Return (T5013 Forms), for information on which partnerships are exempt. Each member should file:

• Form T661 for the partnership,
• financial statements for the partnership,
• schedules showing the calculation and allocation of the ITC of the partnership, and
• member’s Schedule T2SCH31 or Form T2038(IND) by their respective reporting deadline for claiming an ITC (see sections 6.1 to 6.4) in order to claim the ITC allocated from the partnership.

Legislative References Income Tax Act
Subsection 37(1) Pool of deductible SR&ED expenditures
Paragraph 96(1) Partnerships – General rules
Paragraph 96(1)(e.1) Partnership and the pool of deductible SR&ED expenditures
Subsection 127(8) Investment tax credit of partnership

Legislative References Income Tax Regulations
Subsection 229(1) Partnership return
Subsection 229(2) Partnership return
Subsection 229(5) Partnership return

Example 1

Partnership required to file T5013 forms

A corporation and an individual are the only members of a partnership. The partnership's fiscal year end is December 31, 2017. The corporation's tax year ends on March 31. The individual's tax year ends on December 31.

The partnership would have to file a Partnership Information Return (T5013 forms), (refer to T4068, Guide for the Partnership Information Return (T5013 forms)). Form T661 of the partnership should accompany the Partnership Information Return (T5013 forms). The partnership Form T661 should be filed by June 15, 2019, which is the earliest member’s deadline (in this case, the individual) to allow for all members to claim an SR&ED ITC.

The corporation's filing due date (see section 5.0) to submit its corporate tax return would be September 30, 2018. The corporation would be required to file, on or before September 30, 2019, Schedule T2SCH31 to identify the ITC allocated from the partnership. Form T5013, Statement of Partnership Income, provides information on the ITC allocated.

The individual's filing due date to submit a tax return would be June 15, 2018. The individual would be required to file, on or before June 15, 2019, Form T2038(IND) to identify the ITC allocated from the partnership. Form T5013, Statement of Partnership Income, provides information on the ITC allocated.

If the partnership Form T661 and an amended Partnership Information Return (T5013 forms) were submitted to the CRA after June 15, 2019, the individual who is a member of the partnership would not be able to claim the ITC allocated.

Example 2

Partnership exempt from filing T5013 forms

Two individuals are the only members of a partnership. The partnership's fiscal year end is December 31, 2017. This partnership is exempt from filing a Partnership Information Return (T5013 forms) and chooses not to file one.

Each individual's filing due date to submit a tax return would be June 15, 2018. The individuals would be required to file Form T2038(IND) with a copy of Form T661 for the partnership, financial statements for the partnership, and schedules showing the calculation and allocation of the ITC of the partnership on or before June 15, 2019.

7.0 Applying the rules

The SR&ED filing requirement rules discussed below apply to any original or amended prescribed form for SR&ED.

7.1 Filing by the SR&ED reporting deadline

If prescribed forms containing the prescribed information in respect of the expenditure (see section 4.1) and the prescribed information in respect of the ITC amount earned on the expenditure (see section 4.2) are filed on or before the SR&ED reporting deadline (see section 6.0), the claimant is considered to have met the filing requirements for the expenditures and the ITC claimed.

7.2 Filing by the SR&ED reporting deadline but some information is missing

If prescribed forms are filed on or before the SR&ED reporting deadline (see section 6.0), but they do not contain all the prescribed information in respect of the expenditures (see section 4.1) being claimed or the prescribed information in respect of the ITC amount earned on the expenditures (see section 4.2); the claimant will not be considered to have met the filing requirements for these expenditures or ITC. If the forms are reviewed by the CRA before the SR&ED reporting deadline, the CRA will advise the claimant of any deficiencies and the claimant will be allowed, up to the SR&ED reporting deadline, to provide any missing information. The onus is on the claimant to file the prescribed forms containing the prescribed information on time.

Note
A claim filed using estimates or filed partially complete, may not result in SR&ED expenditures or ITC. A letter expressing "an intent to file" an SR&ED claim is not considered to meet the filing requirements as the prescribed forms have not been filed.

Filing a form or schedule with missing information may result in a claim being delayed in processing, or partially or fully denied.

7.3 Filing after the SR&ED reporting deadline

If prescribed forms (see section 3.0) are not filed by the SR&ED reporting deadline (see section 6.0), the CRA will not allow any additional time to provide the prescribed information (see section 4.0) in respect of the expenditures or for the ITC amount earned on the expenditures. Where the claimant has filed prescribed forms after the SR&ED reporting deadline, the claimant will be advised in writing that the SR&ED claim was not accepted because the prescribed forms containing the prescribed information in respect of the expenditures and the ITC were not filed on time.

If the claimant has not met the filing requirements, the expenditure will not be considered an expenditure on or in respect of SR&ED. The claimant will be precluded from deducting the expenditure as an SR&ED expenditure, and that expenditure will not qualify to earn an ITC, even if the deficiencies are redressed after the SR&ED reporting deadline. The expenditures that were claimed will be classified in accordance with the Income Tax Act, but without reference to the provisions relating to SR&ED.

Legislative References Income Tax Act
Subsection 37(12) Misclassified expenditures
Subsection 127(9) Definition of "investment tax credit", paragraph (m)

7.4 Date received

Claims that are hand-delivered will be considered filed on that day. First-class mail or daily service will be considered filed on the date of the postmark. If the SR&ED reporting deadline happens to fall on a Saturday, Sunday or a public holiday recognized by the CRA, the filing deadline is extended to the next business day. Some recognized public holidays are specific to a province or territory. For a detailed listing of public holidays recognized by the CRA, refer to the CRA web site.

For claims received through CRA's Corporation Internet Filing service, the filing date is the date that the confirmation number is issued.

7.5 Claims under review

If, after filing an initial claim, a claimant wishes to amend an SR&ED claim to include additional project(s) or expenditure(s), the CRA will only consider the information if it is provided by the SR&ED reporting deadline (see section 6.0). Once the SR&ED reporting deadline has passed, no additional project(s) or expenditure(s) will be considered or allowed. A claimant cannot include additional or substitute expenditures after the SR&ED reporting deadline to make-up for expenditure amounts that had been disallowed by the CRA.

8.0 Questions and answers

Question 1: What is the difference between an SR&ED claim that meets the SR&ED filing requirements and the requirements for processing an SR&ED claim?

SR&ED filing requirements

In order for an amount to be considered an SR&ED expenditure and to earn an ITC on that SR&ED expenditure, a claimant must file prescribed forms (see section 3.0) containing prescribed information (see section 4.0) in respect of the expenditure and for the ITC earned on that expenditure, on or before the SR&ED reporting deadline (see section 6.0). If the claimant has not met the filing requirements, then the amount is not an SR&ED expenditure and no ITC can be earned on the amount.

Form T661, Scientific Research and Experimental Development (SR&ED) Expenditures Claim, is the main prescribed form for the purposes of SR&ED expenditures.

The main prescribed form for the purposes of determining an ITC is either Schedule T2SCH31, Investment Tax Credit – Corporations, or Form T2038(IND), Investment Tax Credit (Individuals).

To earn an ITC, a claimant must meet the filing requirements for both Form T661 and Schedule T2SCH31 or Form T2038(IND), as applicable.

Where a claimant meets the filing requirement for Form T661, but does not file the Schedule T2SCH31 or Form T2038(IND) containing the prescribed information by the SR&ED reporting deadline, the claimant would:

• only be able to deduct the allowable SR&ED expenditures from income or include them in the pool of deductible SR&ED expenditures; and
• not be entitled to earn any ITC on the SR&ED expenditures.

Where a claimant meets the filing requirement for Schedule T2SCH31 or Form T2038(IND), but does not file Form T661 containing the prescribed information by the SR&ED reporting deadline, the claimant would:

• not be able to deduct any SR&ED expenditures from income or include them in the pool of deductible SR&ED expenditures; and
• not be entitled to earn any ITC on the SR&ED expenditures (because there would be no eligible SR&ED expenditures).

Processing an SR&ED claim

In order for the CRA to process a SR&ED claim, a claimant must file with the CRA:

• prescribed forms (Form T661 and Schedule T2SCH31 or Form T2038(IND), as applicable) containing the prescribed information in respect of an expenditure and the ITC earned on an expenditure by the SR&ED reporting deadline; and
• a T1, Income Tax and Benefit Return; a T2, Corporation Income Tax Return; a T3, Trust Income Tax and Information Return; or a Partnership Information Return (T5013 forms).

An SR&ED claim that does not consist of the prescribed forms containing the relevant prescribed information and an income tax return (or information return) cannot be processed in a timely manner. Consequently, the processing of the claim will be delayed until the prescribed forms containing the prescribed information in respect of the expenditures and for the ITC in respect of those expenditures are provided and the return is filed. However, the expenditures will be denied as SR&ED expenditures and there will be no ITC earned if the prescribed information with respect to the expenditures or for the ITC earned on those expenditures is not submitted within the SR&ED reporting deadline.

Question 2: What happens when an SR&ED claim is filed without an income tax return?

A claimant files an SR&ED claim, consisting of Form T661 and Schedule T2SCH31 or Form T2038(IND) including all prescribed information (see section 4.0) in respect of the expenditures and the ITC in respect of those expenditures, within the SR&ED reporting deadline (see section 6.0) without an income tax return. The claimant will meet the filing requirements for SR&ED expenditures and the ITC, but the processing of the claim will be delayed until an income tax return for the year is filed.

Question 3: What happens when a tax return is filed with a Form T661 but without a Schedule T2SCH31 or Form T2038(IND)?

A claimant only files Form T661 containing the prescribed information (see section 4.0) in respect of the expenditures with an income tax return, by the SR&ED reporting deadline (see section 6.0). The claimant will meet the filing requirements for the SR&ED expenditures, but since Schedule T2SCH31 or Form T2038(IND) (as applicable) was not filed, the claimant will not meet the filing requirement for the ITC.

If the claimant then files Schedule T2SCH31 or Form T2038(IND) containing the prescribed information by the SR&ED reporting deadline, the claimant will meet the filing requirements for the SR&ED expenditures and for the ITC in respect of these expenditures. The ITC claim can then be processed.

If Schedule T2SCH31 or Form T2038(IND) is filed after the SR&ED reporting deadline, the claimant would be able to deduct the allowable SR&ED expenditures from income or include them in the pool of deductible SR&ED expenditures, but the claimant would not be entitled to earn any ITC on the SR&ED expenditures identified in the year.

Question 4: What happens when a tax return is filed without a Form T661 but with a Schedule T2SCH31 or Form T2038(IND)?

For example, the claimant is a corporation and only files Schedule T2SCH31 with an income tax return within the SR&ED reporting deadline (see section 6.0) for the ITC. In order to earn an ITC on expenditures, the claimant must meet the filing requirements for both the expenditures and the ITC.

If the claimant then files Form T661 containing the prescribed information in respect of the expenditures (see section 4.1) by the SR&ED reporting deadline, the claimant will be considered to have met the filing requirements for both the SR&ED expenditures and for the ITC in respect of these expenditures. The claim can then be processed.

If Form T661 is filed after the SR&ED reporting deadline, the claimant will be considered not to have met the filing requirements for the SR&ED expenditures and no ITC will be allowed on those expenditures. The CRA will not accept the SR&ED claim, and the income tax return will be processed without the benefit of the SR&ED incentives.

Question 5: When a tax return for the year was already filed, can an SR&ED claim for the year be made?

If the SR&ED reporting deadline (see section 6.0) for the tax year has not passed, the claimant may file a request to the CRA to reassess a return and include an SR&ED claim. A claimant must file the prescribed forms (see section 3.0) containing the prescribed information (see section 4.0) in respect of the expenditures and for the ITC earned on the expenditures, on or before the SR&ED reporting deadline. For information on how to change a return or request a reassessment, refer to the guide to the income tax return appropriate to the taxpayer situation: T1, Income Tax and Benefit Return, T2, Corporation Income Tax Return, or T3, Trust Income Tax and Information Return.

Question 6: When determining the SR&ED reporting deadline for a corporation, is the 18 months based on the number of days or the number of months after the end of the tax year?

The filing due date for a T2, Corporation Income Tax Return, is six months after the end of the tax year.

When the corporation's tax year ends on the last day of a month, the return should be filed by the last day of the sixth month after the end of the tax year.

When the last day of the tax year is not the last day of a month, the return should be filed by the same day of the sixth month after the end of the tax year.

This policy is the same for the purpose of determining a claimant's SR&ED reporting deadline (see section 6.0) for filing Form T661 in respect of the expenditures and Schedule T2SCH31 in respect of the ITC on these expenditures.

Example

A corporation has a tax year ending on February 28. The corporation's T2, Corporation Income Tax Return, filing due date would be August 31 of the same year. As a result, the corporation's SR&ED reporting deadline would be August 31 of the following year.

Example

A corporation has a tax year ending on January 6. The corporation's T2, Corporation Income Tax Return, filing due date would be July 6 of the same year. As a result, the corporation's SR&ED reporting deadline would be July 6 of the following year.

Question 7: When does an SR&ED claim need to be filed in order for the CRA to review and advise the claimant of any deficiencies in the SR&ED claim?

If an SR&ED claim is filed at least 90 days before the SR&ED reporting deadline (see section 6.0), the CRA should have sufficient time to conduct an initial review to determine whether or not the claim meets the filing requirements for expenditures and the ITC earned on the expenditures, and advise the claimant of any deficiencies in the claim. A partially completed claim or omitted information may delay the processing of a claim.

If the SR&ED claim is not filed with sufficient time to allow the CRA a reasonable amount of time to review the claim, the CRA will not be able to advise the claimant of any deficiencies in the claim. Only those expenditures identified on the prescribed forms (see section 3.0) with the prescribed information (see section 4.0) included on the prescribed forms within the SR&ED reporting deadline may be allowed as SR&ED expenditures and result in an ITC.

The onus is on the claimant to file the prescribed forms containing the prescribed information in respect of the expenditures and for the ITC in respect of these expenditures on or before the SR&ED reporting deadline. If the CRA is unable to review the SR&ED claim and advise the claimant of any deficiencies in the claim before the SR&ED reporting deadline, the CRA will not allow any additional time beyond the SR&ED reporting deadline for the claimant to redress the deficiencies. As a result, the claimant will not earn SR&ED incentives on these expenditures.

Question 8: Will the CRA disallow the entire claim for not meeting the filing requirements?

A claimant has filed Form T661 and Schedule T2SCH31 (or Form T2038(IND)) within the SR&ED reporting deadline (see section 6.0) for expenditures and the ITC. Expenditures for fifteen projects were claimed, but the project information of Part 2 of the T661 for ten projects was provided. Project information for five projects, Part 2 was not filed by the SR&ED reporting deadline. The other relevant prescribed information (see section 4.1) was provided.

The CRA will not disallow the entire claim. The CRA will not accept any information with respect to the five missing projects after the SR&ED reporting deadline, and all the associated costs will not be allowed as SR&ED expenditures.

The relevant prescribed information for the other ten projects was provided by the SR&ED reporting deadline, the CRA will accept this portion of the claim as meeting the filing requirements for expenditures and the ITC.

9.0 Other prescribed forms

9.1 Form T1145, Agreement to Allocate Assistance for SR&ED Between Persons Not Dealing at Arm's Length

9.1.1 Use of Form T1145

Form T1145 must be used where there is a non-arm’s length relationship between parties to allocate an amount received that is government assistance, non-government assistance or a contract payment ("assistance") in respect of SR&ED, to a non-arm's length party that is also performing the SR&ED.

The transferor (the person transferring) and the transferee (the person receiving) have to file a completed copy of Form T1145. Form T1145 (the Agreement) should accompany the Form T661 as it would provide supporting information of the amount of "assistance" included on Form T661.

9.1.2 Filing requirements for Form T1145

Form T1145 has to be filed:

• on or before the transferor's filing due date (see section 5.0) for the particular tax year to which the agreement relates;
• in the period within which the transferor may serve a notice of objection to an assessment of tax payable under Part I for the particular year; or
• in the period within which the transferee may serve a notice of objection to an assessment of tax payable under Part I for its first tax year that ends at or after the end of the transferor's particular year.

For the purposes of "assistance", a partnership is deemed to have a filing due date that is the same as a corporation, for example, six months after year end.

Copies of resolutions of the directors authorizing such an agreement may be required; refer to instructions on Form T1145 for further information.

Legislative References Income Tax Act
Subsection 127(19) Reduction of qualified expenditures
Subsection 127(20) Agreement to allocate
Subsection 127(23) Partnership taxation year

9.2 Form T1146, Agreement to Transfer Qualified Expenditures Incurred in respect of SR&ED Contracts Between Persons Not Dealing at Arm's Length

If a taxpayer performs SR&ED on behalf of a non-arm's length party, the amounts paid by the non-arm’s length party can be claimed as SR&ED expenditures but these payments do not qualify for the ITC. There is a mechanism to transfer qualified expenditures of a person who performed the SR&ED to the non-arm's length person who paid for the SR&ED.

9.2.1 Use of Form T1146

Form T1146 can be used by the SR&ED performer (the "transferor") to transfer qualified SR&ED expenditures to a non-arm's length party (the "transferee") in situations where the transferor performed SR&ED contractor services for the transferee who paid for these services.

The transferor (the person transferring) and the transferee (the person to whom the qualified expenditures are transferred to) have to file a completed copy of Form T1146 (for example, the agreement or amended agreement). This agreement should accompany Form T661 as it would provide supporting information of the amounts of qualified SR&ED expenditures "transferred to" or "transferred from" included on Form T661.

9.2.2 Filing requirements for Form T1146

 Form T1146 has to be filed:

• on or before the transferor's filing due date (see section 5.0) for the particular tax year to which the agreement relates;
• in the period within which the transferor may serve a notice of objection to an assessment of tax payable under Part I for the particular year; or
• in the period within which the transferee may serve a notice of objection to an assessment of tax payable under Part I for its first tax year that ends at or after the end of the transferor's particular year.

Copies of resolutions of the directors authorizing such an agreement may be required; refer to instructions on Form T1146 for further information.

Legislative References Income Tax Act
Subsection 127(13) Agreement to transfer qualified expenditures
Subsection 127(14) Identification of amounts transferred
Subsection 127(15) Invalid agreements

9.3 Form T1174, Agreement Between Associated Corporations to Allocate Salary or Wages of Specified Employees for Scientific Research and Experimental Development (SR&ED)

9.3.1 Use of Form T1174

Where a specified employee is performing SR&ED activities for two or more associated corporations, the maximum limit for a specified employee's—five times the year’s maximum pensionable earnings (YMPE)—must be allocated among the associated group.

Form T1174 provides supporting information for an SR&ED expenditure and thus should be filed with Form T661.

9.3.2 Filing requirements for Form T1174

When a specified employee was employed by more than one associated corporation, each associated corporation claiming SR&ED should file with its tax return and Form T661 a completed copy of the Form T1174. A certified copy of the resolution of the directors may also be required. Refer to the instructions on Form T1174 for further information.

Legislative References Income Tax Act
Subsection 37(9.3) Agreement among associated corporations
Subsection 37(9.4) Filing

9.4 Form T1263, Third-party payments for Scientific Research and Experimental Development (SR&ED)

9.4.1 Use of Form T1263

Form T1263 can be used by a claimant making payments to approved associations, universities, colleges, research institutes, granting councils, and corporations, who performed SR&ED in Canada (third-party payments). The SR&ED performed must be related to a business of the claimant and the claimant must be entitled to exploit the results.

9.4.2 Filing requirements for Form T1263

One copy of Form T1263 must be filed for each third-party payment.

Form T1263 provides supporting information for a third-party payment expenditure claimed on Form T661. Form T1263 should accompany Form T661 and thus has the same reporting deadline (see section 6.0) as the Form T661.

For more information on filing for a third-party payment expenditure, refer to Form T1263. For more information on what is a third-party payment expenditure for SR&ED purposes, refer to the Third-Party Payments Policy.

Legislative Reference Income Tax Act
Subparagraphs 37(1)(a)(ii) & (iii) Pool of deductible SR&ED expenditures – Payments to certain third parties

9.5 Schedule T2SCH49, Agreement Among Associated Canadian-Controlled Private Corporations to Allocate the Expenditure Limit

9.5.1 Use of Schedule T2SCH49

Schedule T2SCH49 is used to allocate the SR&ED expenditure limit among a group of associated corporations that performed SR&ED.

9.5.2 Filing requirements for Schedule T2SCH49

Schedule T2SCH49 should be filed when at least one corporation in a group of associated corporations is claiming the SR&ED ITC. This schedule provides information as to how much of a corporation's qualified SR&ED expenditures may qualify for the ITC at the 35% rate when there is a group of associated corporations. This schedule does not supply supporting information for SR&ED expenditures. This schedule should be filed with Schedule T2SCH31.

Legislative Reference Income Tax Act
Subsection 127(10.3) Associated corporations

10.0 Forms for provincial and territorial R&D credits

The following is a list of forms and schedules for provincial and territorial SR&ED or research and development (R&D) tax credits that the CRA administers and that may comprise part of a claimant's federal tax return:

Newfoundland

T1129, Newfoundland and Labrador Research and Development Tax Credit (Individuals)

T2SCH301, Newfoundland and Labrador Research and Development Tax Credit

Nova Scotia

T2SCH340, Nova Scotia Research and Development Tax Credit

New Brunswick

T2SCH360, New Brunswick Research and Development Tax Credit

Ontario

T2SCH508, Ontario Research and Development Tax Credit

T2SCH566, Ontario Innovation Tax Credit

T2SCH568, Ontario Business-Research Institute Tax Credit

T2SCH569, Ontario Business-Research Institute Tax Credit Contract Information

Manitoba

T2SCH380, Manitoba Research and Development Tax Credit

Saskatchewan

T2SCH403, Saskatchewan Research and Development Tax Credit

British Columbia

T666, British Columbia (BC) Scientific Research and Experimental Development Tax Credit

Yukon

T1232, Yukon Research and Development Tax Credit (Individuals)

T2SCH442, Yukon Research and Development Tax Credit

For many provincial R&D tax credit programs, a claimant who has filed a T661 and does not wish to receive provincial R&D credits must renounce the credit. A claimant must renounce the provincial R&D credit, in most cases, by the filing due date (see section 5.0) of their tax return, which for corporations is six months after year end.

Most of the provincial and territorial R&D schedules or forms have a reporting deadline that is consistent with the reporting deadline (see section 6.0) for ITC on Schedule T2SCH31 or Form T2038(IND). For more information on provincial R&D and territorial schedules or forms, refer to the Provincial and Territorial Government R&D Programs page of the CRA website, the instructions section of the specific provincial or territorial schedule / form, or the relevant provincial or territorial section in Chapter 8 of the T4012, T2 Corporation – Income Tax Guide.

Note
Provincial R&D claims for Quebec must be filed with their respective provincial income tax return.

Appendix A – COVID-19 Extension of filing due date and SR&ED reporting deadline

In response to the COVID-19 pandemic, the CRA has extended the filing due dates for submitting some 2019 and 2020 income tax returns of corporations and trusts. The June 15, 2020, filing due date to submit a 2019 income tax return for individuals operating a proprietorship was not extended.

The Income Tax Act, under subsection 220(2.2), specifically excludes the use of Ministerial discretion (under subsection 220(2.1)) to waive or extend the filing deadline of forms for the SR&ED Tax Incentive Program (expenditure and investment tax credit).

Eligibility for the SR&ED tax incentives is dependent on the filing of prescribed forms by a specific deadline. As part of the annual income tax return filing, Form T661, Scientific Research and Experimental Development (SR&ED) Expenditures Claim and Form T2SCH31, Investment Tax Credit – Corporations or Form T2038-IND Investment Tax Credit (Individuals) must be filed with the CRA, no later than 12 months after the taxpayer’s income tax return filing due date.

The passing of Bill C-20, an Act respecting further COVID-19 measures, allows the Minister of National Revenue under the, Time Limits and Other Periods Act (COVID-19) (TLOPA), to issue an order to extend the SR&ED reporting deadline. On August 31, 2020, an order was issued by the Minister, allowing for the SR&ED reporting deadlines normally occurring from March 13, 2020, through to December 30, 2020, to be extended for six months, but no later than December 31, 2020.

If the SR&ED reporting deadline happens to fall on a Saturday, Sunday, or a public holiday recognized by the CRA, the CRA will consider the SR&ED claim filed on time if it is sent on the first business day after the SR&ED reporting deadline. When the SR&ED reporting deadline would be on the last day of the month, the extension is to the last day of the sixth month or December 31, 2020, if sooner. When the SR&ED reporting deadline is not the last day of a month, the extension is to the same day of the sixth month or December 31, 2020, if sooner.

A.1 SR&ED reporting deadlines for corporations – COVID-19 pandemic

A corporation’s filing due date to submit a tax return is six months after the tax year-end. The SR&ED reporting deadline for corporations is 12 months after the tax return filing due date.

As a result of a ministerial order, the SR&ED reporting deadlines for corporations with tax year-ends of September 13 to December 31 2018, that would normally have SR&ED reporting deadlines of March 13 to June 30, 2020, have all been extended by six months. Corporations with tax year-ends of January 1 to June 29, 2019, that would normally have SR&ED reporting deadlines of July 1 to December 29, 2020, have all been extended to December 31, 2020.

In response to the COVID-19 pandemic, the CRA also extended the filing due dates for submitting some 2019 and 2020 corporate income tax returns. The extensions to the income tax return filing due dates also resulted in extensions to SR&ED reporting deadlines.

The following table summarizes the impact of the COVID-19 measures on SR&ED reporting deadlines for corporations.

*When the corporation’s tax year ends on the last day of a month, the filing due date is the last day of the sixth month after the end of the tax year. Therefore, neither December 30 nor May 30 is required as the 6 month filing due dates for the tax years that end on June 30 and November 30 are December 31 and May 31, respectively.
**May 31 is a Sunday therefore CRA moved the filing due date with the September 1, 2020, deadline period extension.

Example 1
A corporation's tax year end is October 31, 2018. The income tax return filing due date was April 30, 2019. With the extension of the SR&ED reporting deadline as a result of the order under the Time Limits and Other Periods Act (six months extension but not past December 31, 2020), the corporation has until October 31, 2020 instead of April 30, 2020 to file or make changes to the prescribed information in respect of an expenditure on Form T661 and to include the ITC amount in respect of the expenditure on Schedule T2SCH31, for the October 31, 2018, income tax return.

Example 2
A corporation's tax year end is January 31, 2019. The income tax return filing due date was July 31, 2019. With the extension of the SR&ED reporting deadline as a result of the order under the Time Limits and Other Periods Act (six months extension but not past December 31, 2020), the corporation has until December 31, 2020 instead of July 31, 2020 to file or make changes to the prescribed information in respect of an expenditure on Form T661 and to include the ITC amount in respect of the expenditure on Schedule T2SCH31, for the January 31, 2019, income tax return.

Example 3
A corporation’s tax year end is September 30, 2019. The income tax return filing due date would be March 31, 2020, but because of the COVID measures, the income tax return filing due dates for corporations that would otherwise have a filing deadline after March 18 and before May 31, 2020 have been extended to June 1, 2020. Consequently, the SR&ED reporting deadline is extended to June 1, 2021, which is 12 months after the revised filing due date.

Example 4
A corporation’s tax year end is November 30, 2019. The income tax return filing due date would be May 31, 2020, but because of the COVID measures, the income tax return filing due dates for corporations that would otherwise have a filing deadline on May 31, or in June, July, or August 2020 have been extended to September 1, 2020. Consequently, the SR&ED reporting deadline is extended to September 1, 2021, which is 12 months after the revised filing due date.

A.2 SR&ED reporting deadlines for individuals – COVID-19 pandemic

An individual operating a sole proprietorship has a filing due date to submit a tax return that is June 15, after their tax year-end. A proprietorship’s tax year-end is always December 31. The SR&ED reporting deadline for individuals operating a proprietorship is 12-months after the tax return filing due date. A sole proprietorship with a December 31, 2018, tax year-end would normally have an SR&ED reporting deadline of June 15, 2020, but the ministerial order has extended this date to December 15, 2020. The June 15, 2020, filing due date to submit a 2019 individual operating a proprietorship income tax return was not extended, and the SR&ED reporting deadline remains June 15, 2021. The following table summarizes the impact of the COVID-19 measures on SR&ED reporting deadlines for an individual operating a proprietorship.

Example
A sole proprietorship’s tax year end is December 31, 2018. The income tax return filing due date was June 15, 2019, and their SR&ED reporting deadline was June 15, 2020 (12 months after the income tax return filing due date). With the extension of the SR&ED reporting deadline as a result of the order under the, Time Limits and Other Periods Act (six months extension), the individuals operating a sole-proprietorship has until December 15, 2020 instead of June 15, 2020 to file or make changes to the prescribed information in respect of an expenditure on Form T661 and to include the ITC amount in respect of the expenditure on T2038-IND Investment Tax Credit (Individuals), for the December 31, 2018, T1 income tax and benefit return.

A.3 SR&ED reporting deadlines for trusts – COVID-19 pandemic

A trust’s filing deadline (filing due date) to submit a tax return is 90 days after their tax year-end. The SR&ED reporting deadline for trusts with business operations is 12-months after their tax return filing due date.

As a result of a ministerial order, trusts with tax year-ends of December 13, 2018 to March 31, 2019, that which would normally have SR&ED reporting deadlines of March 13 to June 29, 2020, had their SR&ED reporting deadline extended by exactly six months. Trusts with year-end dates of April 1 to October 1, 2019 that would normally have an SR&ED reporting deadline of June 30 to December 30, 2020 have been extended to December 31, 2020.

In response to the COVID-19 pandemic, the CRA also extended the filing due dates for submitting some 2019 and 2020 trust income tax returns. The extensions to the income tax return filing due dates also resulted in extensions to SR&ED reporting deadlines.

The following table summarizes the impact of the COVID-19 measures on the SR&ED reporting deadlines for trusts.

Example 1 

A trust’s tax year end is December 13, 2018. The income tax return filing due date was March 13, 2019, and their SR&ED reporting deadline was March 13, 2020 (12 months after the income tax return filing due date). With the extension of the SR&ED reporting deadline as a result of the order under the Time Limits and Other Periods Act (six months extension but not past December 31, 2020), the trust will now have until September 13, 2020 instead of March 13, 2020 to file or make changes to the prescribed information in respect of an expenditure on Form T661 and to include the ITC amount in respect of the expenditure on T2038-IND Investment Tax Credit (Individuals), for the December 31, 2018, T3 Trust income tax and information return.

Example 2 

A trust’s tax year end is January 31, 2020. The income tax return filing due date would be April 30, 2020 but because of the COVID measures, the income tax return filing due dates for trusts that would otherwise have a filing deadline after March 30 and before May 31, 2020 have been extended to June 1, 2020. Consequently, the SR&ED reporting deadline for this trust is extended to June 1, 2021, to file or make changes to the prescribed information in respect of an expenditure on Form T661 and to include the ITC amount in respect of the expenditure on T2038-IND Investment Tax Credit (Individuals), for the January 31, 2020, T3 Trust income tax and information return.

Example 3
A trust’s tax year end is March 31, 2020. The income tax return filing due date would be June 29, 2020, but because of the COVID measures, the income tax return filing due dates for trusts that would otherwise have a filing deadline on May 31, or in June, July, or August 2020, have been extended to September 1, 2020. Consequently, the SR&ED reporting deadline for this trust is extended to September 1, 2021, to file or make changes to the prescribed information in respect of an expenditure on Form T661 and to include the ITC amount in respect of the expenditure on T2038-IND Investment Tax Credit (Individuals), for the March 31, 2020, T3 Trust income tax and information return.

Legislative References Income Tax Act
Subsection 150(1) Filing returns of income – General rule
Paragraph 150(1)(a) Filing returns of income – Corporations
Paragraph 150(1)(c) Filing returns of income – Trusts and estates
Subparagraph 150(1)(d)(ii) Filing returns of income – Individuals
Subsection 248(1) Definition of "filing due date"
Subsection 37(11) Filing requirement
Subsection 127(9) Definition of "investment tax credit", paragraph (m)

Legislative References Time Limits and Other Periods Act (COVID-19)
Subsection 7(1) Ministerial orders — Acts and regulations
Subsection 7(3) Non-application
Subsection 7(4) Duration
Subsection 7(5) Retroactivity
Order Respecting Time Limits and Other Periods under the Income Tax Act (COVID-19) Minister of National Revenue

Appendix B – References

B.1 Legislative references

Appendix C – Revisions

C.1 Explanation of changes

The following are the explanation of changes to the SR&ED Filing Requirements Policy as part of the revision of 2020-11-26:

Section 3.1, in the first paragraph the last sentence has been revised to add “and qualified SR&ED expenditures.”

Section 5.0, this section has been updated to include reference to new Appendix A for extensions to SR&ED reporting deadlines due to COVID-19 pandemic. The heading to the table in this section is also updated.

Section 6.0, the examples in this section has been updated with more recent tax year ends consequently revising the income tax return filing due dates and SR&ED reporting deadlines.

Appendix A, a new appendix has been added to explain the impact of COVID-19 pandemic extensions of the income tax return filing due date and the SR&ED reporting deadline for corporations (section A.1), individuals (section A.2) and trusts (section A.3). Several examples have been included to illustrate the impact of the extensions to the filing due date and SR&ED reporting deadline, including the effect of an ministerial order.

Other minor formatting and editing corrections were made throughout the document.