Canada Revenue Agency
Transitional Measures for Filing the Simplified SR&ED Claim Form T661

(ADDENDUM TO T661 QUESTIONS AND ANSWERS)

Questions and answers

• Q.1 Commercial tax preparation software includes the current version of tax return schedules, including Form T661.  How can claimants who prepare their tax returns using commercial software continue to file a previous version of Form T661?
• Q.2 Does this mean that claimants who choose option 3 in Q.1 above are required to file information for all projects, whereas claimants who choose options 1 or 2 only need to submit the top 20 projects?
• Q.3 Based on the above information, how should claims be filed?
• Q.4 Where can I get more information?

According to Question 5 in the November 10, 2008 Questions and Answers regarding the new SR&ED Claim Form T661, claimants have the option of using the previous version (07) of Form T661 for tax years ending in 2008 or earlier.

Q.1  Commercial tax preparation software includes the current version of tax return schedules, including Form T661.  How can claimants who prepare their tax returns using commercial software continue to file a previous version of Form T661?

A.1  To file a previous version of Form T661 for tax years ending in 2008 or prior, claimants have several options:

1. Claimants can use a previous version of commercial tax preparation software to prepare Form T661.
2. Claimants can file a paper copy of Form T661.  All previous versions are available on the CRA Web site on the page containing Form T661 under the heading “Previous year versions”.
3. Claimants can file version (08) of Form T661 and attach the previously required free-flowing project descriptions.

Please refer to the filing instructions provided in Q.3 below.

According to Question 6 in the November 10, 2008 Questions and Answers regarding the new SR&ED Claim Form T661, claimants who use version (08) of Form T661 are required to submit all projects instead of just the top 20.

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Q.2  Does this mean that claimants who choose option 3 in Q.1 above are required to file information for all projects, whereas claimants who choose options 1 or 2 only need to submit the top 20 projects?

A.2  As a transitional measure, for tax years ending in 2008 or prior, claimants who conducted more than 20 projects may choose to continue to provide project information for only the 20 largest projects (in dollar value) regardless of the version of Form T661 they use.  However, during a more in-depth review, descriptions for any of the remaining projects may be requested, as has always been the case.  Please refer to the filing instructions provided in Q.3 below.

These transitional measures have been introduced to encourage claimants to begin using version (08) of Form T661.

Q.3  Based on the above information, how should claims be filed?

A.3  As a transitional measure, for tax years ending in 2008 or prior, the manner of filing a claim will depend on the version of Form T661 being used.

For version (08) of Form T661, project information can be provided by completing a separate Part 2 for the projects being claimed and providing the textual descriptions in one of two formats:

• By completing lines 240, 242, and 244 for experimental development projects, or lines 250 and 252 for scientific research projects.  For instructions on how to complete these lines, refer to Part 2 of the T4088 (08), Guide to Form T661.
• By providing separate project descriptions for the projects being claimed and, at lines 240, 242, and 244 for experimental development projects, or at lines 250 and 252 for scientific research projects, entering the following text:
  
  
  
  “A separate project description has been submitted.”
  
  
  For instructions on how to prepare a project description, refer to Part 2 of the T4088 (07), Guide to Form T661.

For previous versions of Form T661, project information can be provided by preparing separate project descriptions for the projects being claimed.  For instructions on how to prepare a project description, refer to Part 2 of the T4088 (07), Guide to Form T661.

For tax years ending after 2008, version (08) of Form T661 must be used and a separate Part 2 must be completed for all projects being claimed, including lines 240, 242, and 244 for experimental development projects, or lines 250 and 252 for scientific research projects.

Please refer to the Revised - Application Policy SR&ED 2004-02R4: Filing Requirements for Claiming SR&ED for additional information.

Q.4  Where can I get more information?

A.4  You can obtain more information about the SR&ED program on the CRA SR&ED Web site at www.cra.gc.ca/sred.  Alternatively, you can contact your nearest tax services offices listed on our Web site at www.cra.gc.ca/sred under the section “SR&ED contacts”.