The T661 Form Guide
Everything a Canadian founder needs to file Form T661 in 2026: what it is, the 18-month deadline, the companion schedules, the three narrative lines that decide your claim, and what happens after you submit it.
Estimate your SR&ED credit →Direct answer: Form T661, titled Scientific Research and Experimental Development (SR&ED) Expenditures Claim, is the CRA form every SR&ED claimant files to describe their qualifying projects and calculate their claim. Corporations attach it to their T2 return along with Schedule T2SCH31; individuals attach it to their T1 return along with Form T2038(IND). Corporations have 18 months from their fiscal year end to file, with no extensions. The form's highest-stakes section is Part 2, where lines 242, 244, and 246 ask what technological uncertainty you faced, what work you did about it, and what advancement you achieved. Get those three lines right and the rest of the form is mostly arithmetic.
1. What is Form T661?
Form T661, Scientific Research and Experimental Development (SR&ED) Expenditures Claim, is the document every SR&ED claimant in Canada completes to claim the federal SR&ED tax incentive. It has ten parts: general information (Part 1), project information (Part 2), four parts of expenditure calculations (Parts 3 to 6), additional information (Part 7), a claim checklist (Part 8), claim preparer information (Part 9), and certification (Part 10). Most of the claim's dollar value and nearly all of its review risk sit in Parts 2 and 3. Parts 1 through 10 together typically run several pages, but a founder who has organized time records and a clear technical narrative can complete the whole form in a focused week or two.
Source: CRA, Form T661, Scientific Research and Experimental Development (SR&ED) Expenditures ClaimThe accompanying guide, T4088, walks through every line of the form and is worth reading before you open the form itself. It is available as a free fillable PDF directly on canada.ca alongside the paper version. T661 is not a standalone submission: it always travels with an income tax return. For a step-by-step walkthrough of the wider SR&ED claim process, from confirming eligibility through calculating your credit, see our SR&ED claim guide.
T4088: the CRA's guide to Form T661, and how to use it
T4088 is the Canada Revenue Agency's guide to Form T661, the claim form for SR&ED (often typed SRED) tax incentives. The T4088 guide explains the form line by line, from Part 1 to Part 10. As of October 13, 2026, canada.ca publishes it as an online page and as a PDF, t4088-26e.pdf.
The guide says the SR&ED legislation and the CRA's policy documents take precedence over it, and that filing on a previous version of Form T661 may delay your claim.
| In T4088 | What it covers, and where that is here |
|---|---|
| Before you start | The forms to file and the reporting deadline. Find your deadline |
| Part 2, Section B | How to answer lines 242, 244 and 246, with each word limit. A filled-in example |
| Part 3, Section A | Choosing the proxy or the traditional method. Proxy or traditional |
| Parts 3 to 5 | Which costs go on which line, with worked examples. The form, part by part |
| Appendix 2 | Documentation and other evidence to support the claim. SR&ED claim guide |
2. Who has to file T661?
Any person or business that performed, or paid someone else to perform, qualifying SR&ED work in Canada during the tax year can file T661. Most claimants are CCPCs, since they are the only filer type eligible for the enhanced 35% refundable investment tax credit on qualifying expenditures. Other corporations and public corporations claim at the base 15% non-refundable rate, though Budget 2025 gave certain public corporations partial access to enhanced treatment for the first time. Individuals and sole proprietors file T661 with their T1 personal return plus Form T2038(IND). Partnerships calculate the SR&ED pool at the partnership level and allocate the resulting credit out to individual partners, who each claim their share on their own returns.
Filing T661 does not, by itself, guarantee the work qualifies. The CRA reviews claims against the legislative definition in the Income Tax Act and the eligibility criteria set out in its published policy. If your work does not meet the three-part test (technological uncertainty, systematic investigation, technological advancement), filing the form does not create eligibility that isn't there.
3. When is the T661 deadline?
Verified July 2026Under subsection 37(11) of the Income Tax Act, a corporation's SR&ED reporting deadline is 12 months after the filing due date for its income tax return for that year. A T2 corporate return is due six months after fiscal year end, so the SR&ED reporting deadline lands 18 months after the fiscal year in which the expenditures were incurred. Individuals filing a T1 personal return have a shorter window: 17.5 months from the end of the tax year. Both deadlines are absolute. The CRA does not accept late SR&ED claims and does not grant extensions, regardless of the reason for the delay.
A worked example: December 31 fiscal year end
Take a CCPC with a fiscal year ending December 31, 2025. Its T2 corporate return is due June 30, 2026, six months after year end. The SR&ED reporting deadline is 12 months after that filing due date, landing on June 30, 2027. Counted from the fiscal year end itself, that is exactly 18 months. Miss June 30, 2027, and the entire year's SR&ED claim for that fiscal year is gone; there is no late-filing mechanism to recover it. Founders who file their corporate return early, well ahead of the six-month due date, do not get more SR&ED time as a result. The clock runs from the return's due date, not from when you actually filed.
Source: CRA, SR&ED Filing Requirements PolicyPractically, this means most founders should plan to have T661 substantially drafted alongside the corporate return, not deferred to the outer edge of the 18-month window. Waiting until month 16 or 17 to start reconstructing a year-old technical narrative and time records is the single most common cause of rushed, weak Part 2 narratives.
SR&ED filing deadline: find your T661 date by tax year-end
- Year ended January 31, 2025T661 was due July 31, 2026Passed
- Year ended February 28, 2025T661 was due August 31, 2026Passed
- Year ended March 31, 2025T661 was due September 30, 2026Passed
- Year ended April 30, 2025File T661 by October 31, 2026Within 90 days
- Year ended May 31, 2025File T661 by November 30, 2026Within 90 days
- Year ended June 30, 2025File T661 by December 31, 2026Within 90 days
- Year ended July 31, 2025File T661 by January 31, 2027Open
- Year ended August 31, 2025File T661 by February 28, 2027Open
- Year ended September 30, 2025File T661 by March 31, 2027Open
- Year ended October 31, 2025File T661 by April 30, 2027Open
- Year ended November 30, 2025File T661 by May 31, 2027Open
- Year ended December 31, 2025File T661 by June 30, 2027Open
Dates assume a month-end year-end, with no adjustment for weekends or holidays. Year-end not listed? Your SR&ED claim deadline is the T2 due date, six months after the year ends, plus 12 months: a year that ended March 31, 2026 runs to September 30, 2027. Individuals have 17.5 months: for the 2025 calendar year, mid-June 2027.
Your deadline is still open? Estimate what the claim is worth before you start the form.
Estimate my SR&ED credit →4. What are T661's companion schedules?
T661 calculates your qualifying SR&ED expenditures and describes the underlying projects, but it does not, by itself, apply the credit to your tax return. That step happens on a companion schedule specific to your filer type. Corporations attach Schedule T2SCH31, Investment Tax Credit, Corporations, which rolls the qualified expenditure pool from T661 into the T2 corporate return's investment tax credit calculation and tracks the refundable and non-refundable portions separately. Most tax software generates Schedule T2SCH31 automatically once the T661 figures are entered, so the manual work is concentrated in T661 itself.
Individuals and sole proprietors follow a different path. They attach Form T2038(IND), Investment Tax Credit (Individuals), to their T1 personal return. T2038(IND) applies the same investment tax credit mechanics as Schedule T2SCH31 does for corporations, adapted for the personal tax system: individuals earn the base 15% rate on qualified SR&ED expenditures and can receive a partial cash refund of the credit earned, with the remainder available to reduce tax payable or carry forward. Unused SR&ED investment tax credits generally carry back three years and forward twenty years for both corporations and individuals.
| Filer type | Primary return | Companion schedule |
|---|---|---|
| Corporation (including CCPC) | T2 | Schedule T2SCH31 |
| Individual / sole proprietor | T1 | Form T2038(IND) |
| Partnership | Partnership information return | Allocated to partners, then T2SCH31 or T2038(IND) per partner |
Form T661, part by part: what each part asks for
- 1 Technical lead Part 2
- 6 Finance Parts 1, 3 to 7
- 3 Sign-off Parts 8 to 10
- Part 1 · FinanceGeneral information. Business name, tax year and business number.
- Part 2 · Technical leadProject information. One entry per project. Section B is the three written answers: lines 242, 244 and 246.
- Part 3 · FinanceCalculation of SR&ED expenditures. Starts with the overhead method on lines 160 and 162 (proxy or traditional), then totals salaries, materials and contracts.
- Part 4 · FinanceQualified expenditures for the investment tax credit. The amount that earns the credit.
- Part 5 · FinancePrescribed proxy amount. The salary base and the proxy amount. Only if you elected the proxy method on line 160.
- Part 6 · FinanceProject costs. Costs split by project. The projects listed must equal the number claimed.
- Part 7 · FinanceAdditional information. Figures for Statistics Canada on research and development in Canada.
- Part 8 · Sign-offClaim checklist. The CRA's list to confirm the claim is complete before you send it.
- Part 9 · Sign-offClaim preparer information. Anyone paid to prepare or help prepare the claim. The guide says a $1,000 penalty may be assessed if the details are missing or inaccurate.
- Part 10 · Sign-offCertification. Who certifies the form and its attachments, and the date.
5. What do lines 242, 244, and 246 ask?
Each project claimed on T661 gets its own Part 2 entry built around three questions. Line 242 asks what scientific or technological uncertainties you attempted to overcome, capped at 350 words. Line 244 asks what work you performed in the tax year to overcome those uncertainties, including the hypotheses tested, the experiments or analysis conducted, and the results, in roughly chronological order, capped at 700 words. Line 246 asks what scientific or technological advancements you achieved, or attempted to achieve, as a result of the work described on line 244, again capped at 350 words. Together the three lines run to a maximum of 1,400 words per project.
Sources: CRA, How to write your project description for Form T661; CRA, T4088, Guide to Form T661What CRA's Research and Technology Advisors look for on each line
On line 242, the CRA's own guidance says to name a specific technical obstacle that publicly available knowledge, the accumulated body of science and technology accessible to a competent professional in the field, could not resolve. A vague statement that something was "difficult" or "novel" without naming the obstacle does not satisfy the line. On line 244, the reviewer wants a chronological account: what you hypothesised, what you built or tested, what you measured, and what you concluded, including negative or partial results. CRA guidance is explicit that answers should use the technical language and style of the people who did the work, not commercial or marketing language. On line 246, the advancement described has to tie directly back to the uncertainty named on line 242. A generic claim of "improved performance" without connecting it to the original technical obstacle reads as incomplete.
| Line | Question | Word limit |
|---|---|---|
| 242 | What technological uncertainties did you attempt to overcome? | 350 words |
| 244 | What work did you perform to overcome them (hypotheses, experiments, results)? | 700 words |
| 246 | What technological advancements did you achieve or attempt to achieve? | 350 words |
Our SR&ED without a consultant guide walks through a full worked example of these three lines, sentence by sentence, if you want a model to write from.
A T661 example: lines 242, 244 and 246 filled in
Line 242
What scientific or technological uncertainties did you attempt to overcome? (Maximum 350 words)
Illustration: an invented companyOur objective was a robotic picker that removes plastic bottles from a recycling belt moving at 2 metres per second.
The objective of the project.
The grasp-point methods published when we began assumed rigid, separated objects. None covered crushed, overlapping, see-through containers.
The knowledge base at the onset, and its shortcomings.
It was not known whether one depth camera could find a stable grasp point on such items within 40 milliseconds.
The uncertainty: whether the result can be achieved was not known from generally available knowledge.
Line 244
What work did you perform in the tax year to overcome the scientific or technological uncertainties described in line 242? (Maximum 700 words)
Illustration: an invented companyWe first hypothesized that combining depth and polarized-light images would recover the outline of see-through bottles.
A hypothesis designed to reduce the uncertainty.
From March to June we tested this on 1,200 labelled belt images. Outline error fell, but each frame took 95 milliseconds.
The experiment and its result, in chronological order.
We concluded the combined method was too slow. In the autumn we tested a smaller model trained on crushed items; a contractor labelled the images.
A conclusion, and contractor work identified as such.
Line 246
What scientific or technological advancements did you achieve or attempt to achieve as a result of the work described in line 244? (Maximum 350 words)
Illustration: an invented companyWe now know that polarized-light imaging recovers see-through outlines but cannot meet a 40 millisecond limit on our hardware.
New knowledge, set against the knowledge base at the onset.
The smaller model met the time limit on crushed items but not on overlapping ones, which remain unresolved.
The guide notes that failing to reach an objective does not necessarily mean there is no advancement.
These three lines are one part of a claim. See the whole claim, from eligibility to filing, before you write your own.
Read the SR&ED claim guide →6. Proxy method or traditional method?
Lines 160 (proxy) and 162 (traditional) on T661 are where you choose between the proxy method and the traditional method for calculating overhead, and the election is irrevocable for that tax year. Under the proxy method, the CRA lets you add the Prescribed Proxy Amount, currently 55% of qualifying SR&ED salaries, as a deemed overhead figure without tracking a single actual overhead expense. Under the traditional method, you instead identify and allocate real overhead costs (a portion of rent, utilities, supervisory salaries, and similar costs) directly to SR&ED projects, which requires more bookkeeping but can produce a larger claim for operations with heavy facility or capital costs relative to salaries.
Source: CRA, Prescribed Proxy Amount PolicyA plain-language decision rule
If your qualifying costs are dominated by engineer and researcher salaries, which describes most early-stage software, hardware, and biotech claimants, the proxy method almost always produces a larger claim for far less administrative work: no need to allocate rent, hydro, or a supervisor's time project by project. Switch to the traditional method only if your SR&ED work is unusually capital- or facility-intensive relative to salaries, for example a lab-heavy operation with modest headcount but significant equipment and space costs, where actual overhead allocation could exceed 55% of the salary base. When in doubt, run the calculation both ways before checking a box on line 160 or 162; the election cannot be undone for that tax year once filed.
One specific limit applies to specified employees, generally founder-owners and other employees who own or are related to someone who owns a significant stake in the corporation. Their salary or wages for SR&ED purposes is capped at five times the Year's Maximum Pensionable Earnings (YMPE) under the Canada Pension Plan, and the proxy method applies an additional constraint limiting how much of a specified employee's time and salary base can flow into the Prescribed Proxy Amount calculation. If your claim includes significant founder salary, confirm the current YMPE-based cap before finalizing the numbers.
From your T661 numbers to the credit: the SR&ED tax credit calculation
The $525,000 is an example figure only. For your own number, the SR&ED tax credit calculator works from your salaries, contractors and materials. Provincial credits are separate: see SR&ED rates by province.
Source: CRA, SR&ED investment tax credit (page dated April 1, 2026). Read October 13, 2026.7. What happens after you file T661?
Verified July 2026Once the CRA receives a complete T661 with your return, it either processes the claim as filed or selects it for review. The CRA's published program service standards target processing a refundable SR&ED claim within 120 calendar days of receiving a complete claim, if the claim is not selected for review, and aim to meet that standard 90% of the time. If a refundable claim is selected for review, the target extends to 180 calendar days. These are targets, not guarantees, and processing can run longer during high-volume periods.
Source: CRA, SR&ED Program Service StandardsThe First-Time Claimant Advisory Service (FTCAS)
If this is your first SR&ED claim, or you haven't filed one in the last three years, the CRA may select you for the First-Time Claimant Advisory Service. FTCAS is explicitly not an audit and is not a review of your claim's eligibility. By the time you're invited, your claim has already been approved for payment. A technological advisor and a financial reviewer meet with you, typically for one to two hours, to walk through your project and expenditures, then follow up with a written summary and guidance for preparing future claims more efficiently. Treat the FTCAS invitation as free coaching from the people who will be reading your future claims, not as a threat to the current one.
Source: CRA, First-Time Claimant Advisory Service (FTCAS)8. What triggers a T661 review?
A technical review typically starts because the narrative on lines 242, 244, or 246 reads as routine engineering rather than systematic investigation: it describes what was built without naming a specific technical obstacle, or it uses commercial and marketing language instead of the technical language a practitioner in the field would use. A financial review typically starts because a claimed hour allocation cannot be traced to a supporting time record, a contractor invoice describes generic "consulting services" without identifying the SR&ED work performed, or government assistance received on the same costs, such as an IRAP grant, was not properly netted out of the claim.
Being a first-time claimant is itself a soft trigger, since the CRA routes many new filers through FTCAS or a light-touch review as a matter of course, independent of claim quality. Large or complex claims, multiple concurrent projects, and prior years with a reduced or denied claim all raise the likelihood of a closer look on the current filing. None of these triggers mean a claim will fail; they mean a reviewer, technical or financial, will read the file more carefully. The documentation habits covered in our SR&ED claim guide, contemporaneous time records, dated project notes, and invoices that name the SR&ED work explicitly, are what let a flagged claim survive review intact.
9. What changed for T661 in 2026?
Verified July 2026Canada's 2025 federal budget proposed the largest set of SR&ED changes in years, and those proposals became binding law on March 26, 2026, when Bill C-15, the Budget 2025 Implementation Act, No. 1, received Royal Assent in Parliament. The changes apply retroactively to tax years beginning on or after December 16, 2024, so many fiscal-2025 T661 filings submitted in 2026 are the first to actually benefit.
The expenditure limit for the enhanced 35% refundable rate rose directly from $3 million to $6 million for CCPCs, doubling the maximum federal refundable credit at that rate from $1.05 million to $2.1 million per year. The phase-out range, based on the corporation's prior-year taxable capital employed in Canada, widened from $10 million to $50 million under the old rules to $15 million to $75 million. SR&ED capital expenditures, excluded from the program since 2014, became eligible again for expenditures made after December 15, 2024, where the capital is used primarily for SR&ED work. And for the first time, certain Canadian public corporations gained partial access to the enhanced credit rate, previously reserved for CCPCs only.
Sources: Parliament of Canada, Bill C-15, Budget 2025 Implementation Act, No. 1, Royal Assent; PwC Canada, Tax Insights: SR&ED updatesNone of this changes how T661 itself works mechanically. The form's structure, the Part 2 narrative lines, the 18-month filing deadline, and the proxy method's 55% loading are all unchanged. What changed is the ceiling: a scaling CCPC that used to hit the enhanced-rate wall at $3 million of qualifying expenditures now has twice the room before the rate steps down. See our complete SR&ED tax credit guide for the full rate and eligibility picture beyond the form itself.
10. Do you even qualify for SR&ED?
Qualifying SR&ED work satisfies three conditions simultaneously. There must be a technological uncertainty: a specific obstacle that publicly available knowledge in the field could not resolve at the outset. There must be a systematic investigation: a structured process of hypothesis, experiment, and conclusion, not undirected trial and error. And there must be a technological advancement, or an attempt at one: work that pushes past the field's publicly available baseline, whether or not the attempt ultimately succeeds. Routine engineering, integration of off-the-shelf components, and commercial or design work do not qualify, regardless of how difficult or time-consuming they were.
Founders often under-claim because they assume only breakthrough research counts. In practice, a genuinely novel technical approach adopted because published methods didn't work for your specific constraints, an unusual data profile, an unconventional deployment environment, a performance target the field's known techniques couldn't hit, is routinely eligible. If you're unsure whether your last project year clears the bar, GrantCompass's quiz below can point you toward the right SR&ED and broader funding guides for your situation in about two minutes, and our directory covers 850+ Canadian grant, loan, and tax-credit programs beyond SR&ED alone.
T661 and SR&ED filing: short answers
The guideWhat is the T4088 guide?
The deadlineWhat is the SR&ED filing deadline?
Late claimsDoes the CRA accept a late T661?
The formsWhich forms are filed with Form T661?
The methodProxy method or traditional method on T661?
Estimate your SR&ED credit before you file T661
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