Claiming your R&D tax credits for your corporation or business can seem complex and overwhelming. In fact, it does take specialized knowledge and insight to maximize your return and to complete it in a way that meets the CRA’s requirements.
Enhanced Capital Recovery is here to take care of your R&D claim, ensuring that nothing is missed and that all the “I”s are dotted and “T”s are crossed on your claim. Even if you prefer to claim on your own, consider ECR to help review your current claim or even past claims. We offer free, no risk consultation – just fill out the contact form at the end of this post if you’d like to take advantage of the opportunity.
The following is the process for completing the claim, with a few tips to overcome some of the challenges in the process.
Whether you’re a corporation, or an individual who carries on a business, you have to complete and file Form T661 if you want to claim SR&ED expenditures. This form is used to provide technical information about your SR&ED projects, calculate your SR&ED expenditures, and calculate the SR&ED expenditures that qualify for an investment tax credit.
To claim your investment tax credit, you also have to file either Form T2038, Investment Tax Credit for Individuals, or Schedule T2SCH31, Investment Tax Credit for Corporations, along with form T661.
- Document R&D work while it’s in process; for example, keep track of any product trials, experiments to remedy unanticipated results, and documents explaining industry research; meet with key employees often to capture these improvements and make a habit of discussing and documenting your expanding industry knowledge; ECR can help you implement a streamlined tracking system to make end of year filing easier.
- It’s good practice to file your SR&ED forms at the same time that you file your income tax return.
Completing Your T661 Form
Form T661 has 10 parts that can be grouped into five components:
- general information,
- project information
- financial information
- statistical information
Part 1: Simply fill out your general information, such as identification and contact information.
Part 2: Project information. In this section, you need to provide detailed information about the scientific or technological content of your work. A separate Part 2 must be completed for each project you’re claiming.
Part 3: Calculate your deductible expenditures for the purpose of calculating your net income.
Part 4 & 5: Calculate the expenditures that qualify for your investment tax credit. If you chose the proxy method to calculate your overhead and other expenditures, you’ll calculate your prescribed proxy amount in Part 5 of the form.
Part 6: Break down the costs for each project you’re claiming in the year.
Part 7: This section helps the Government develop valuable statistics about the type of R&D work done in Canada.
Part 8, 9 & 10: The checklist to make sure that your claim is complete before filing it, then provide information about your claim preparer in Part 9, and sign parts 9 and 10 to certify that all your information is true, correct, and complete.
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