What Is The Process For Claiming SR&ED?

The SR&ED program is administered by the Canada Revenue Agency (CRA).  This is important because SR&ED is earned as a matter of right (more of this in a later blog) as opposed to being subject to departmental budgets or the technology “flavor of the month”.  The claimant picks the technology they want to work on because they believe it provides the maximum benefit to its business.


SR&ED is project-based.  The claimant chooses the projects and does not have to wait for permission from any government agency before they begin work.  Also projects can, and often do, span more than one fiscal year.


The SR&ED claim is made as part of your annual income tax return (using a form called the T-661) in which you lay out the amounts spent during your fiscal year a description of the technical uncertainties encountered; the work performed and the technical knowledge gained.  This form also contains information about the employees performing the work, any consultants who also worked on the project and the types of documentation you have available to support your claim.


After your claim is filed one of several things can happen:


  1. Your SR&ED claim will be accepted as filed and a Notice of Assessment (NOA) issued. The tax credits will be applied to any taxes the Company owes and any credits in excess of the taxes owed will be refunded to the taxpayer (provided the taxpayer is a CCPC whose taxable income in the previous period was less than $500,000).


  1. CRA may send a letter requesting samples of the documentation prepared.  If this documentation is satisfactory the return will then be accepted as filed and the process outlined in paragraph 1 will follow.


  1. If CRA has some questions that are left unanswered, then will ask (actually insist) on visiting your premises for the purpose of resolving the remaining issues.  The visit will be made by a Research & Technology Advisor (RTA) usually accompanied by a Financial Advisor.  This step is referred to as a Technical Review.

    RTAs are a specialized group of CRA employees with knowledge of both the SR&ED provisions of the Income Tax Act and knowledge in the field of technology that is the subject of the SR&ED claim.  Many of these staff have Engineering degrees and/or advanced degrees in the relevant field.
    The RTA will then write up a report with their recommendation to CRA Management.  This recommendation can either accept the claim in its entirety, in which case we go back to the process outlined in 1 above.


  1. Alternatively, the RTA can accept only a part of the claim or disallow the claim entirely.


(To be continued next week)


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