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New SR&ED Form and Guidelines


R&D Tax Update, June 11, 2010 (10-3)

The Canada Revenue Agency (CRA) has four new publications related to the scientific research and experimental development (SR&ED) program:

  1. Revised Form T661
  2. Revised Guide to the T661 Form (T4088)
  3. A new guidance document: The SR&ED Technical Review: A Guide for Claimants (Draft)
  4. A new Claim Review Manual for the CRA’s research and technology advisors (RTAs)

While the revised Form T661 and the related Guide deliver a technical update, the new Claim Review Manual signals a significant policy shift to technical reviews of claims. These documents are now in effect; however the CRA is accepting comments on the Guide for Claimants until August 1, 2010.

Revised Form T661 and related Guide

Revised Form T661 and Guide to the T661 Form are effective June 1, 2010. The changes are not major. Most significant are the additions and reworded definitions in the available classification codes for “Field of Science or Technology” (Line 206). “Software”, 1.02.03, is now “Software Engineering and Technology”, 2.02.09. The mechanical engineering section has been expanded to cover acoustical engineering; reliability analysis; automotive; tooling and equipment manufacturing; and HVAC engineering. There is also a new listing for “Other Engineering and Technologies”, 2.11.03. Actuarial science has been removed from the list.

Box #222 has been removed; this box had allowed the claimant to indicate that the work was carried out “by analysis only”. Also, partnership identification numbers (PINs) and social insurance numbers (SINs) for unincorporated contractors are no longer required.

The SR&ED Technical Review: A Guide for Claimants (Draft)

The SR&ED Technical Review: A Guide for Claimants (Draft), available here, is a new guidance document that sets out review procedures and expectations both for RTAs and for claimants. For example, the normal period for response to a request for information is set at 30 days with two 15-day extensions available upon request. The guide also makes it clear that detailed explanations and properly supported arguments are expected from both claimants and reviewers; alone, the inclusion of passages from the Income Tax Act or from CRA’s policy guidelines are unlikely to be sufficient.

Particularly important is the advice on claim documentation. The new guide confirms that evidence from the time the work was performed is now required for all aspects of an SR&ED claim, including attempted technological advancement as well as the hypothesis generation, experimentation and testing that make up a systematic investigation. Claims without complete evidence records are liable to be disallowed regardless of underlying eligibility.

New Claim Review Manual

The Claim Review Manual is an internal operations manual for CRA reviewers. It sets out in detail every aspect of the process to be followed in a technical review, and the evidence requirements for claims. Together with the new Guide for Claimants it replaces the previous Guide to Conducting an SR&ED Review, which is now cancelled.

Some of these changes warrant careful preparation while work is in progress. Record-keeping practices in particular may require updating. Clearly, evidence requirements are undergoing significant changes. As these requirements become more formal, non-compliance could generate a denial by the CRA. It will be interesting to see whether taxpayers will be given appropriate time to comply with these more formal rules.

Deloitte R&D professionals are available to discuss the implications of these new policies with you.


This publication is produced by Deloitte & Touche LLP as an information service to clients and friends of the firm, and is not intended to substitute for competent professional advice. No action should be initiated without consulting your professional advisors. Your use of this document is at your own risk.