SR&ED Program Update and Advisory (April 2009)
April 6, 2009

Canadian Advanced Technology Alliance

Scientific Research and Experimental Development (SR&ED) Program Update and Advisory (April 2009)

Items of interest and importance to all companies claiming or looking to claim SR&ED Tax Credits. Please circulate this Update and Advisory to your Directors of Finance and CFO's. Comments, observations and feedback should be directed to Dr. Russ Roberts, CATA's Senior VP of Tax and Finance at "Russ Roberts"


Concerns IT community

The 2007 Federal Budget consultations highlighted the concerns that the community had about consistency in the delivery of the SR&ED program with established government policy, the consistency of managerial oversight of the reviews, and the capacity of the redress processes to deliver objective, knowledgeable second opinions that effectively redirect reviews to avoid uncalled-for conflicts in audit.

In the 2008 Federal Budget, the Government committed to continuing the SR&ED tax credits as their major mechanism of federal support for business innovation and to improving the CRA's administrative processes, policy clarity, and application.

Results of CATA's roundtable conference calls with practitioners and tax managers in Fall 2008

In the fall of 2008, CATA conducted a series of roundtable conference calls with private sector managers and practitioners. The input we received was that at least for those who participated, the experiences of companies undergoing reviews was not likely to be improving.

The feedback we have received from the CRA's discussions with other associations such as the Canadian Electric Association (CEA) indicated a potential serious policy disconnect between the CRA and leading policy experts on the boundaries of eligibility, how to approach eligibility, and what work is to be included in the envelope of SR&ED.

During this period, at the suggestion of the Department of Finance, CATA sought clarification from the CRA. Unfortunately, a forum that encouraged significant dialogue was not then available.

CRA's November/December 2008 Releases of new T661 Form and Guidance for SR&ED program

The CRA released a new approach to the "prescribed" filing requirements (T661 Form) and very specific filing guidelines that, in principle, established new standards for filing. These were interpreted by many knowledgeable experts as consistent with a change in the way the scope of a project would be defined and consistent with a major change in the scope of eligible work to be associated with an SR&ED project.

Community Actions

The concerns of the community have been brought forward to the Government, the Department of Finance, and the Commissioner of the CRA by at least one provincial government, by CATA, by many other associations, by individuals and by companies. Recent ongoing discussions this year with the CRA and other Government officials have led to significant clarifications by the CRA.


The Federal Government, through the Honourable Jean-Pierre Blackburn, Minister of National Revenue, and the CRA has clarified that

  • there would not be any change in policy nor was it intended;
  • policy clarification is to be consistent with historical practice; and
  • transitional measures would be introduced that would permit the use of e-forms for filing of claims for tax years ending on or before December 31, 2008, (an issue that CATA had raised with the Minister of National Revenue).

An Expert Working Group convened by CATA is working with the CRA to assist them with suggestions for clarifications that bring the new T661 filing documents into clearer synch with historical policy and in ways to avoid the impression that the Guide to the prescribed T661 form establishes new policy requirements. The CRA will issue Q&As to provide the clarification, and, in the future, will adjust the T661 Form and the Guide to the T661.

Further discussions are expected with the CRA that will focus on the redress issues raised by the community and on eligibility.


CATA has been assured that the Government looks upon the SR&ED program as one of its key supports for business innovation during this critical period, that it is committed to the program's effective delivery, and that it is committed to the achievement of these goals. CATA has been encouraged by our discussion with Minister Blackburn's Office and the commitment we have seen. Our support for these efforts has been communicated to Minister Blackburn.

Please go to see CATA's letter CRA Minister Blackburn.

Note: For a detailed Video Briefing of the key observations arising from these discussions, we will soon openr CATAnet TV  On-Demand where Dr. Roberts has a SR&ED Channel.

Also, CATA believes that the candid and frank discussions of the Expert Working Group with CRA officials are important and we are very encouraged by these discussions. CATA looks forward to seeing tangible clarification of the new T661 Form and guidance that will diminish concerns.

CATA has expressed its support for the simplification and clarity that could be achieved with the new concept for the T661 submission, and with policy clarification where policy is unclear. CATA has been encouraging the CRA to look for processes and mechanisms that ensure policy integrity, its functionality, and its consistent communication and delivery as the CRA moves forward with its initiatives. We have recently been assured by Hélène Dompierre, Director General of the SR&ED Program, that full details establishing the transparency of the process will be tabled to stakeholders

CATAnet TV  On-Demand

CATA will soon announce a new educational service, CATAnet TV  On-Demand, designed to assist businesses in accessing leading experts and their thinking on current business challenges. As one of our first shows, Dr. Russ Roberts takes you through CRA's new Electronic "SR&ED Eligibility Self-Assessment Tool" for determining if your development projects may be eligible for the SR&ED Tax credits. He provides background on why the CRA is asking the questions and suggestions on when you may wish to look further before deciding that you do not have development work that is eligible. We expect to launch the opening of this new service on April 16th. You can now preview CATAnet TV  On-Demand.