Understanding changes to the SR&ED form: The T661(20)

Understanding changes to the SR&ED form: The T661(20)

In December 2020, the Canada Revenue Agency (CRA) implemented changes to the Scientific Research and Experimental Development (SR&ED) form, the T661. The new version of the T661 form, the T661(20), is now in use, and the T661(15) will no longer be accepted as of January 1, 2021. In this post, we’re going to look through the changes that were made, and how to take these changes into account when you are filing for SR&ED in 2021.

The revised version of the T661 removes the lines related to capital expenditures and added box 758 in Part 6 – Project costs, to include overhead and other expenditures for each project claimed. Starting in 2021, the CRA will only be accepting form T661(20) for SR&ED claims.

Part 6, Box 758

The new form T661(20) includes a new box, box 758, in part 6 of the T661. Part 6 covers project costs for all SR&ED projects claimed in the tax year.1 In previous forms, the table in part 6 allowed claimants to record their project costs individually, in terms of recording and allocating costs.2 In previous versions of the T661, only boxes 750, 752, 754, and 756 were listed in this table.3 Now, the T661 has gained a new box on this table, box 758.

Box 758 represents “overhead and other expenditures”.4 If you’re electing to use the proxy method when filing for your SR&ED claim, you will enter “0” for the amount in box 758.5 If you’ve chosen the traditional method, enter the overhead costs and other costs incurred for SR&ED for each project for box 758.6 If you’re not sure whether you should use the proxy method or the traditional method, read our post Proxy vs Traditional SR&ED Claim: Which Method to Choose?. Overall, the total of all entries under box 758 should be equal to that of the amount entered in line 360 in your T661.7

Line 758 of T661(20) SR&ED claim form.

Line 758, on the right side of this picture, was added to the newest version of the T661 form.

SR&ED claimants are explicitly required to enter their information into box 758 for projects with tax year ends after 2020 (but note that for projects with tax year ends before 2021, entering the information into box 758 is optional).8

Part 3, Lines 350, 355, 390

The lines for recording lease costs of equipment used to perform SR&ED, as well as capital expenditures for depreciable property used have been removed from the new T661(20): lines 350, 355, or 390.9 Formerly, they could be found in section B of the T661 (calculation of allowable SR&ED expenditures). The CRA removed these lines because lease costs for equipment and capital expenditures are no longer SR&ED eligible expenditures.10

Part 4 changes

There is an expansive list of line removals from part 4, which calculates SR&ED expenditures for investment tax purposes of the T661. Lines 496, 510, 512, 514, 516, 518, 532, 535, 540, 543, and 546 have all been removed. The CRA has removed these lines because capital expenditures are no longer SR&ED eligible expenditures.11 Line 504 was removed as well, which recorded the costs of shared-use equipment, which is now not an eligible SR&ED expenditure.12 While it was on the previous version of the T661, all capital expenditures made after January 1, 2014, were ineligible, but was left on the old form to allow those claiming capital expenditures made before 2014 to submit their claim.13 Also, the subtotal lines 557 and 558 have both been removed as they are no longer required.14

Furthermore, the CRA has modified line 528, to ensure that only 80 percent of the amount entered in respect of an SR&ED contract to a person or partnership that is not a taxable supplier is included on line 528, since the remaining 20 percent of said amount is recorded on line 529.15

Extensions due to COVID-19

The CRA has also made certain extensions regarding some SR&ED deadlines for the T661 form. Due to the COVID-19 pandemic, corporate SR&ED claimants could submit six months after their tax year-end, no later than December 31, 2020. If their tax year ends were between September 13  to December 31, 2018 and had deadlines of March 13 to June 20, 2020, these claimants’ deadlines were extended by six months.16 If corporate claimants had tax year ends between January 1 to June 29, 2019, with original deadlines between July 1, 2020, to December 29, 2020, their deadlines were extended to December 31, 2020.17 No deadlines were extended past December 31, 2020.

Individual claimants (who operate on a sole proprietorship) had their SR&ED deadline extended by six months to December 15, 2020 (from a prior deadline of June 15, 2020), if their tax year-end was December 31, 2018.18

Trusts applying for SR&ED had their deadlines extended by six months, or to December 31, 2020. If trusts had initial deadlines of March 13 to June 30, 2020 (with tax year ends between December 13, 2018, to April 1, 2019), their deadlines were extended an extra six months.19 If trusts had their reporting deadlines between July 1, 2020 and December 30, 2020, they were given until December 31, 2020 to submit their claims.20

No deadlines were extended past December 31, 2020.

Conclusion

Filling out your SR&ED form, the T661, can be confusing in normal times, but it’s important to understand changes to the T661 as they arise. Make sure to check the CRA’s updates to the SR&ED program and refer to our website for explanations of these changes.

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Show 20 footnotes

  1. Canada Revenue Agency. (December 14, 2020). “T4088 – Scientific Research and Experimental Development (SR&ED) Expenditures Claim – Guide to Form T661.” Retrieved January 8, 2021, from https://www.canada.ca/en/revenue-agency/services/forms-publications/publications/t4088/guide-form-t661-scientific-research-experimental-development-expenditures-claim-guide-form-t661.html.
  2. Canada Revenue Agency. (2016). “Scientific Research and Experimental Development (SR&ED) Expenditures Claim Guide to Form T661.” Retrieved January 8, 2021, from https://www.canada.ca/content/dam/cra-arc/formspubs/pub/t4088/t4088-15e.pdf.
  3. Canada Revenue Agency. (2016). “Scientific Research and Experimental Development (SR&ED) Expenditures Claim Guide to Form T661.” Retrieved January 8, 2021, from https://www.canada.ca/content/dam/cra-arc/formspubs/pub/t4088/t4088-15e.pdf.
  4. Canada Revenue Agency. (December 14, 2020). “T4088 – Scientific Research and Experimental Development (SR&ED) Expenditures Claim – Guide to Form T661.” Retrieved January 8, 2021, from https://www.canada.ca/en/revenue-agency/services/forms-publications/publications/t4088/guide-form-t661-scientific-research-experimental-development-expenditures-claim-guide-form-t661.html.
  5. Canada Revenue Agency. (December 14, 2020). “T4088 – Scientific Research and Experimental Development (SR&ED) Expenditures Claim – Guide to Form T661.” Retrieved January 8, 2021, from https://www.canada.ca/en/revenue-agency/services/forms-publications/publications/t4088/guide-form-t661-scientific-research-experimental-development-expenditures-claim-guide-form-t661.html.
  6. Canada Revenue Agency. (December 14, 2020). “T4088 – Scientific Research and Experimental Development (SR&ED) Expenditures Claim – Guide to Form T661.” Retrieved January 8, 2021, from https://www.canada.ca/en/revenue-agency/services/forms-publications/publications/t4088/guide-form-t661-scientific-research-experimental-development-expenditures-claim-guide-form-t661.html.
  7. Canada Revenue Agency. (December 14, 2020). “T4088 – Scientific Research and Experimental Development (SR&ED) Expenditures Claim – Guide to Form T661.” Retrieved January 8, 2021, from https://www.canada.ca/en/revenue-agency/services/forms-publications/publications/t4088/guide-form-t661-scientific-research-experimental-development-expenditures-claim-guide-form-t661.html.
  8. Canada Revenue Agency. (December 14, 2020). “T4088 – Scientific Research and Experimental Development (SR&ED) Expenditures Claim – Guide to Form T661.” Retrieved January 8, 2021, from https://www.canada.ca/en/revenue-agency/services/forms-publications/publications/t4088/guide-form-t661-scientific-research-experimental-development-expenditures-claim-guide-form-t661.html.
  9. Canada Revenue Agency. (2016). “Scientific Research and Experimental Development (SR&ED) Expenditures Claim Guide to Form T661.” Retrieved January 8, 2021, from https://www.canada.ca/content/dam/cra-arc/formspubs/pub/t4088/t4088-15e.pdf.
  10. Canada Revenue Agency. (December 14, 2020). “T4088 – Scientific Research and Experimental Development (SR&ED) Expenditures Claim – Guide to Form T661.” Retrieved January 8, 2021, from https://www.canada.ca/en/revenue-agency/services/forms-publications/publications/t4088/guide-form-t661-scientific-research-experimental-development-expenditures-claim-guide-form-t661.html.
  11. Canada Revenue Agency. (December 14, 2020). “T4088 – Scientific Research and Experimental Development (SR&ED) Expenditures Claim – Guide to Form T661.” Retrieved January 8, 2021, from https://www.canada.ca/en/revenue-agency/services/forms-publications/publications/t4088/guide-form-t661-scientific-research-experimental-development-expenditures-claim-guide-form-t661.html.
  12. Canada Revenue Agency. (December 14, 2020). “T4088 – Scientific Research and Experimental Development (SR&ED) Expenditures Claim – Guide to Form T661.” Retrieved January 8, 2021, from https://www.canada.ca/en/revenue-agency/services/forms-publications/publications/t4088/guide-form-t661-scientific-research-experimental-development-expenditures-claim-guide-form-t661.html.
  13. Lance, Elizabeth. (January 24, 2014). “Can I still claim capital expenditures for SR&ED?” Retrieved January 9, 2021, from https://www.sreducation.ca/claim-capital-expenditures-sred/.
  14. Canada Revenue Agency. (December 14, 2020). “T4088 – Scientific Research and Experimental Development (SR&ED) Expenditures Claim – Guide to Form T661.” Retrieved January 8, 2021, from https://www.canada.ca/en/revenue-agency/services/forms-publications/publications/t4088/guide-form-t661-scientific-research-experimental-development-expenditures-claim-guide-form-t661.html.
  15. Canada Revenue Agency. (December 14, 2020). “T4088 – Scientific Research and Experimental Development (SR&ED) Expenditures Claim – Guide to Form T661.” Retrieved January 8, 2021, from https://www.canada.ca/en/revenue-agency/services/forms-publications/publications/t4088/guide-form-t661-scientific-research-experimental-development-expenditures-claim-guide-form-t661.html.
  16. Canada Revenue Agency. (October 27, 2020). “Extended SR&ED reporting deadlines.” Retrieved January 8, 2021 from https://www.canada.ca/en/revenue-agency/services/scientific-research-experimental-development-tax-incentive-program/whats-new-program/reporting-deadline-extentions.html.
  17. Canada Revenue Agency. (October 27, 2020). “Extended SR&ED reporting deadlines.” Retrieved January 8, 2021 from https://www.canada.ca/en/revenue-agency/services/scientific-research-experimental-development-tax-incentive-program/whats-new-program/reporting-deadline-extentions.html.
  18. Canada Revenue Agency. (October 27, 2020). “Extended SR&ED reporting deadlines.” Retrieved January 8, 2021 from https://www.canada.ca/en/revenue-agency/services/scientific-research-experimental-development-tax-incentive-program/whats-new-program/reporting-deadline-extentions.html.
  19. Canada Revenue Agency. (October 27, 2020). “Extended SR&ED reporting deadlines.” Retrieved January 8, 2021 from https://www.canada.ca/en/revenue-agency/services/scientific-research-experimental-development-tax-incentive-program/whats-new-program/reporting-deadline-extentions.html.
  20. Canada Revenue Agency. (October 27, 2020). “Extended SR&ED reporting deadlines.” Retrieved January 8, 2021 from https://www.canada.ca/en/revenue-agency/services/scientific-research-experimental-development-tax-incentive-program/whats-new-program/reporting-deadline-extentions.html.

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