How to Apply for SR&ED: The Claim Process Without the Consultant Markup

SR&ED claims are filed via the CRA's T661 form, attached to your corporate tax return. The process requires technical narratives, financial schedules, and project-level documentation that most companies aren't prepared to produce at filing time.

Here is the full sequence.

Step 1: Identify Qualifying Projects

Go back through the year. Look for: - Projects where engineers debated the "right" approach without a clear answer - Builds that required multiple failed attempts before working - Features that required novel solutions not available in any library or framework - Performance or scaling challenges that required architectural experimentation

For each project, ask: "Was the outcome technically uncertain before we started?"

Step 2: Build Your Project Descriptions

Each project description must answer: - What scientific or technological uncertainties did you face? - What work did you perform to overcome those uncertainties? - What scientific or technological advancements did you achieve?

The language matters. "We built a recommendation engine" is not SR&ED language. "We investigated whether transformer-based embeddings could reduce cold-start latency below 200ms in sparse user datasets" is SR&ED language.

Step 3: Calculate Eligible Expenditures

Qualifying expenditures fall into four categories:

Salaries and Wages — The largest category for most companies. Only the SR&ED portion of each employee's time counts.

Contractor Costs — 80% of arm's-length contractor fees for SR&ED work qualify.

Materials — Raw materials consumed or transformed during experimental work.

Overhead (Proxy Method) — 55% of eligible salaries is automatically added as overhead. Most companies use this.

Step 4: Complete Form T661

The T661 contains project descriptions, financial calculations, and the investment tax credit computation. For CCPCs, your ITC rate is 35% on the first $3M of qualifying expenditures.

Step 5: Attach to Your T2 Corporate Return

You have 18 months from the end of the fiscal year to file. For a December 31, 2024 year-end, the deadline is June 30, 2026.

Step 6: Prepare for a Potential Review

A CRA reviewer will check: - Does the work described match the uncertainties claimed? - Is there contemporaneous documentation (tickets, commit history, lab notes)? - Are the financial calculations consistent with actual payroll records?

The single best defense: time-stamped records created during the project.

Do You Actually Need a Consultant?

Traditional SR&ED consultants charge 25–30% of the credit value on contingency. On a $300,000 credit, that's $75,000–$90,000 for paperwork.

AI platforms can generate the technical narratives from your project management data and T4s. For most companies, the math no longer supports the contingency model.