Minor policy updates

To support businesses conducting research and development in Canada, the Scientific Research and Experimental Development (SR&ED) program has updated the following three policies:

• SR&ED Salary or Wages Policy
• SR&ED Filing Requirements Policy
• Gross Negligence Penalty on Overstated SR&ED Claims Policy (formerly Application Policy SR&ED 96-05)

Updates have been made to these policies in order to account for income tax changes since their last publication dates, and to add clarity and consistency in language and formatting. The changes are discussed in more detail in each individual policy, which you can access by clicking the links above.

If you have questions or need more support, contact us today.

Published on: January 28, 2025

Amended definition of government assistance, in subsection 127(9) of the Income Tax Act

On June 20, 2024, Bill C-69, Budget Implementation Act, received royal assent.

The Bill includes an amendment to the definition of government assistance in subsection 127(9) of the Income Tax Act. This amendment seeks to ensure that bona fide loans with reasonable repayment terms from public authorities in Canada will generally not be considered government assistance. The amended definition of government assistance provides that government assistance does not include an excluded loan which is newly defined in subsection 12(11) of the Income Tax Act. The amended definition is effective January 1, 2020, and applies to loans made after December 31, 2019.

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These changes may impact claimants that have previously deducted government assistance on Form T661, Scientific Research and Experimental Development (SR&ED) Expenditures Claim, if that government assistance meets the definition of an excluded loan. Claimants affected by this change can submit amended tax returns with their revised SR&ED forms for the years affected as long as the tax year is not statute-barred, even if their SR&ED reporting deadline has passed. If you are past your reporting deadline, new SR&ED expenditures will not be accepted in your amended Form T661. If the tax year affected is statute-barred, investment tax credit (ITC) will still be recoverable when you include the repayment in your tax return for the year the repayment is made.

Schedule T2SCH31, Investment Tax Credit – Corporations, or Form T2038-IND, Investment Tax Credit (Individuals), must be included with the amended T2 return to claim the additional ITC earned. If, in the same tax year, additional amounts of government assistance related to the excluded loan were included as income on Schedule T2SCH1, Net Income (Loss) for Income Tax Purposes, then these amounts can also be removed through an amended Schedule T2SCH1.

For more information about this legislative amendment, go to Explanatory Notes Relating to the Income Tax Act and Other Legislation.

For any questions, contact us.

Published on: January 28, 2025

The Income Tax Rulings Directorate's mailing address

• The Income Tax Rulings Directorate's mailing address found in section 11.3.2 of the Third-Party Payments Policy has been updated.

Published on: April 13, 2023

The following policies have been updated on October 14, 2022

• Prescribed Proxy Amount Policy
• SR&ED Claims for Partnerships Policy
• SR&ED Investment Tax Credit Policy

Published on: October 14, 2022

The following policies have been updated on April 28, 2022

• Prescribed Proxy Amount Policy
• SR&ED Claims for Partnerships Policy
• SR&ED Investment Tax Credit Policy

Published on: April 28, 2022

The following policies have been updated on March 30, 2022

• Pool of Deductible SR&ED Expenditures Policy
• Traditional and Proxy Methods Policy
• Third-Party Payments Policy
• Contract Expenditures for SR&ED Performed on Behalf of a Claimant Policy

Published on: March 30, 2022

The Canada Revenue Agency has updated the following form

• Form T2SCH31 Investment Tax Credit - Corporations

Published on: December 09, 2021

The new Guidelines on the Eligibility of Work for SR&ED Tax Incentives

The new Guidelines on the Eligibility of Work for SR&ED Tax Incentives, which have replaced the Eligibility of Work for SR&ED Investment Tax Credits Policy, provide clearer and simpler information about how SR&ED work is defined under the Income Tax Act. This will make it easier for businesses to assess whether their work is eligible for SR&ED tax incentives at the outset, before they apply.

Published on: August 13, 2021

New filing due-dates for corporate income tax returns for tax year-ends from November 30, 2019, to February 29, 2020

As part of the federal 2020 COVID-19 measures, the filing due-dates for corporate income tax returns for tax year-ends from November 30, 2019, to February 29, 2020, were extended to September 1, 2020, which means the federal SR&ED reporting deadlines for these tax years has been extended to September 1, 2021.

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However, this extension does not apply to the British Columbia Scientific Research and Experimental Development Tax Credit and Nova Scotia Research and Development Tax Credit. For example, British Columbia and Nova Scotia corporations with a December 31, 2019 tax year-end should file their Forms T661, T2SCH31, T666 British Columbia (BC) Scientific Research and Experimental Development Tax Credit or T2SCH340 Nova Scotia Research and Development Tax Credit, and other relevant forms at the latest, June 30, 2021.

For more information go to British Columbia Scientific Research and Experimental Development Tax Credit and Nova Scotia Research and Development Tax Credit for tax year-ends from November 30, 2019, to February 29, 2020.

Published on: June 07, 2021

Guidance: How the Canada emergency wage subsidy affects SR&ED claims

The Guidance: How the Canada emergency wage subsidy affects SR&ED claims is now available to help SR&ED claimants, who are also Canadian emergency wage subsidy (CEWS) recipients, determine how the CEWS might affect their SR&ED claim.

Published on: February 19, 2021

Updated guide T4088

The Canada Revenue Agency has updated the following guide and it is available on Forms and publications:

• Guide T4088, Scientific Research and Experimental Development (SR&ED) Expenditures Claim - Guide to Form T661

Published on: December 01, 2020

SR&ED Filing Requirements Policy has been updated

The SR&ED Filing Requirements Policy has been updated on November 26, 2020.

Published on: December 01, 2020

The Canada Revenue Agency has updated the following forms

The Canada Revenue Agency has updated the following forms and they are now available on Forms and publications:

• Form T661, Scientific Research and Experimental Development (SR&ED) Expenditures Claim
• Form T1145, Agreement to Allocate Assistance for SR&ED Between Persons Not Dealing at Arm's Length
• Form T1146, Agreement to Transfer Qualified Expenditures Incurred in Respect of SR&ED Contracts Between Persons Not Dealing at Arm's Length

Published on: October 30, 2020

The reporting deadlines for SR&ED claims

The reporting deadlines for SR&ED claims have been extended due to COVID-19. For more information, read Extended SR&ED reporting deadlines.

Published on: September 03, 2020

Part 3 of Bill C-20, entitled Time Limits and Other Periods Act (COVID-19), recently received royal assent

Part 3 of Bill C-20, entitled Time Limits and Other Periods Act (COVID-19), recently received royal assent. If the minister of national revenue issues an order, the SR&ED reporting deadlines will be extended for up to six months starting from March 13, 2020, and not past December 31, 2020.

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Since this order has not yet been issued, claimants with a SR&ED reporting deadline on or after March 13, 2020, and who were unable to file an SR&ED claim because of the COVID-19 pandemic, are encouraged to file their claim on the expectation that such an order will be released. Claimants are encouraged to submit their SR&ED claims as early as possible, preferably with their income tax return. For more information on federal draft legislation amending the Income Tax Act that impacts on the SR&ED Program, go to Federal SR&ED legislative proposals status.

Published on: August 13, 2020

Reporting deadlines for the scientific research and experimental development (SR&ED) tax incentive program have not changed

Corporations still have 18 months after their tax year-end to file their SR&ED claim. For example, if your corporation had a December 31, 2018, tax year-end, you have until June 30, 2020, to file your SR&ED claim. However, businesses are strongly encouraged to file their SR&ED claim with their income tax return. Generally, the deadline for corporations to file their income tax return is six months after their tax year-end.

Published on: June 25, 2020

The Canada Emergency Wage Subsidy and the 10% Temporary Wage Subsidy for Employers

The Canada Emergency Wage Subsidy and the 10% Temporary Wage Subsidy for Employers are considered government assistance. Assistance received under either wage subsidy reduces the amount of expenses eligible for SR&ED investment tax credits and film and media tax credits. Additional information is available in the Canada Emergency Wage Subsidy application guide.

Published on: June 19, 2020

Summary of Provincial and Territorial Research and Development (R&D) Tax Credits has been updated

The Summary of Provincial and Territorial Research and Development (R&D) Tax Credits has been updated as at December 31, 2019.

Published on: February 05, 2020

The Scientific Research and Experimental Development Program v 3.0

The Scientific Research and Experimental Development Program v 3.0 – Privacy impact assessment summary has been posted.

Published on: January 14, 2020

The Scientific Research and Experimental Development – Success stories

The Scientific Research and Experimental Development – Success stories web page is now available. These stories provide examples of how the SR&ED tax incentive program benefits Canadian innovation. More stories will be added to this page.

Published on: December 19, 2019

Forms T2SCH31 and T2SCH49

Forms T2SCH31, Investment Tax Credit – Corporations, and T2SCH49, Agreement Among Associated Canadian-Controlled Private Corporations to Allocate the Expenditure Limit, have been updated with the 2019 federal budget measure of removing the previous year taxable income from the calculation of the SR&ED expenditure limit for a CCPC.

Published on: December 16, 2019

SR&ED claims made by physicians and medical professional corporations – Information for claimants

The SR&ED claims made by physicians and medical professional corporations – Information for claimants web page is now available. This page gives physicians and medical professional corporations information to help them prepare their SR&ED claim.

Published on: September 23, 2019

Federal SR&ED legislative proposals status as at June 30, 2019

Federal SR&ED legislative proposals status as at June 30, 2019

Published on: July 25, 2019

Summary of provincial and territorial research & development (R&D) tax credits as at March 31, 2019

Summary of provincial and territorial research & development (R&D) tax credits as at March 31, 2019

Published on: July 25, 2019

Budget 2019 – SR&ED Program

Budget 2019 – SR&ED Program

Published on: June 13, 2019

New service standards

New service standards

Published on: July 12, 2018