Changes in T4088 SR&ED Guide to Form T661 – Comparing the Recent and Previous Version
Updated to Reflect New Policies (2022)
*** Some of the policies referenced were updated 2021-08-13. This article has been updated and is accurate as of 2022. ***
Make sure your claim stays on target with the correct T4088 Guide as there have been changes.
In 2015, changes were made to Part 2 (Project Information) of the T4088 Guide to Form T661. This reflected changes to the 2015 version of the Form T661 and the revised Eligibility of Work for SR&ED Investment Tax Credit Policy. Since January 1, 2016, the CRA will only accept the T661(15) version of the form for all tax years.
What changes have been made to the T4088 Guide that helps you fill out Form T661 (the claim application)? This article will compare the old T4088 (14) and the new, T4088 (15) guides. Information that has been removed has strike through and information that has been added is in bold.
The Changes
Changed Definition of an SR&ED Project
The new T4088 guide truncates what defines an SR&ED project:
| T4088 (14) | T4088 (15) |
|---|---|
| SR&ED Project definition | SR&ED project An “SR&ED project” must fall within the definition of SR&ED contained in the Income Tax Act. An SR&ED project comprises a set of interrelated activities that collectively are necessary to resolve the scientific or technological uncertainty in the attempt to achieve the specific scientific or technological advancements defined for the project. This is pursued through a systematic investigation or search in a field of science or technology by means of experiment or analysis performed by qualified individuals. |
Project Completion Dates Specifics Changed
The need to provide SR&ED project information on a “project-by-project” basis has been dropped. This seems to open SR&ED work up to multiple projects that may be interrelated, so long as the work falls within the definitions of SR&ED as defined by the Income Tax Act. In this sense, what defines an SR&ED project is less restrictive in the new T4088.
The new T4088 defines a project’s completion date in the past tense (compare the bullet points in the table below). This means that projects being considered for eligibility must have reached some sort of completion, even if the project failed:
| T4088 (14) | T4088 (15) |
|---|---|
| Section A – Project identification Line 204 – Completion date Enter the completion date or expected completion date of the SR&ED project. The completion date of the project is defined as the point at which you: - determined that the uncertainties cannot be resolved; or - the date the project is terminated for any reason. It is important to understand that the eligibility of the work also ceases at that point. | Section A – Project identification Line 204 – Completion date Enter the completion date or expected completion date of the SR&ED project. The completion date of the project is defined as the point at which you: - achieved the scientific or technological advancement by resolving the associated uncertainties; - determined that the scientific or technological uncertainties cannot be resolved; or - terminated the project for any reason. It is important to understand that the eligibility of the work also ceases at that point. |
Clarification to “Field of Science or Technology Code”
The new T4088 also firms up what is considered to be an “uncertainty”, as it now must be “scientific or technological”.
The new T4088 adds a new paragraph in the middle of the section on how to fill out Line 206:
| T4088 (14) | T4088 (15) |
|---|---|
| Line 206– Field of science or technology code From the table in Appendix 1, select the field of science or technology that best describes the primary field in which the SR&ED project was attempting to achieve an advancement. The fields of science and technology listed in Appendix 1 are used for statistical and resource management purposes only. It is not an exhaustive list of all eligible fields of science or technology. | Line 206 – Field of science or technology code From the table in Appendix 1, select the field of science or technology that best describes the primary field in which the SR&ED project was attempting to achieve an advancement. Note that the primary field in which the SR&ED project was attempting to achieve an advancement may not necessarily be the same as the field of science or technology of the company project or in which the company carries out its regular business. The field of science and technology you enter on this line is used for statistical and resource management purposes only and not for the purpose of determining eligibility of the work. Appendix 1 is not an exhaustive list of all eligible fields of science or technology. |
The final paragraph of the section has also been slightly reworded, potentially for clarity, however nothing substantial has changed.The code you fill in does not have to relate to the company’s business, nor the same field of science or technology as the company project. It seems that the T4088 is opening up eligibility to new discoveries found that may not have related to the field of science or technology that the project initially sought to solve.
Scientific or Technological Uncertainties Definitions on Line 242
The new T4088 adds in what is considered a scientific or technological uncertainty when completing line 242. This clarifies what is meant by a scientific or technological uncertainty for the purposes of SR&ED eligibility.
| T4088 (14) | T4088 (15) |
|---|---|
| Section B – Project descriptions Line 242 – What scientific or technological uncertainties did you attempt to overcome? (Maximum 350 words) Describe the scientific or technological uncertainty you encountered that led you to do the SR&ED. | Section B – Project descriptions Line 242 – What scientific or technological uncertainties did you attempt to overcome? (Maximum 350 words) Describe the scientific or technological uncertainty you encountered that led you to do the SR&ED. Scientific or technological uncertainty means whether a given result or objective can be achieved or how to achieve it, is not known or determined on the basis of generally available scientific or technological knowledge or experience. |
In describing the work performed to overcome scientific or technological uncertainties, the new T4088 advises applicants to describe the hypothesis designed to reduce or eliminate uncertainties. This requirement for eligibility did not exist in the previous version.
Adding the Description of a “Hypothesis” as a Criteria for Completing Line 244
| T4088 (14) | T4088 (15) |
|---|---|
| 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) In responding to this question, describe, in a clear and concise manner, how you attempted to overcome the scientific or technological uncertainties that you identified at line 242. Describe the work done in chronological order. In doing so, clearly demonstrate the planned approach (systematic nature of the investigation or search). This includes describing the experiments and/or analysis conducted, including the results obtained, their interpretation, and the conclusions. | 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) In responding to this question, describe, in a clear and concise manner, how you attempted to overcome the scientific or technological uncertainties that you identified at line 242. Describe the work done in chronological order. In doing so, clearly demonstrate the systematic nature of the investigation or search. This includes describing; - the hypotheses designed to reduce or eliminate the uncertainties; - experiments and/or analysis conducted to test the hypotheses; - the results obtained; and, - the conclusions. |
More Information
You can download the PDF version of the new T4008 guide from the CRA website, or view it online.
The experiments or analysis conducted must now test the hypothesis. Applicants are no longer required to interpret the results, just offer conclusions.