As covered in our overview of the 2026 SR&ED expansion, the legislative changes received Royal Assent on March 27, 2026. The full updated T661 forms are not yet released. In the meantime, the CRA has published official interim guidance on how to file using the current form. The relevant sections are reproduced below for reference.
Instructions pertaining to new line numbers in Part 2
Line 207 – Canada Research and Development Classification (CRDC) field of research code
From the Statistics Canada Canadian Research and Development Classification (CRDC) 2020 Version 2.0, go to the list beginning on page 18 and select the field of research (FOR) code that best describes the primary field in which you were attempting to achieve a scientific or technological advancement. Enter only the first five digits of the code (RDF#####).
Note that the FOR code that you select for each SR&ED project may differ from the field of science or technology in which you carry out your regular business.
Statistics Canada uses the FOR code you enter on this line to collect data related to research and development conducted in Canada.
Lines 212 and 214 – Pre-claim approval case number
If you got pre-claim approval for this project through the CRA's pre-claim approval process, tick the box on line 212. Enter the pre-claim approval case number on line 214.
Lines 262 and 263 – Capital expenditures information
Line 262
If you are claiming capital expenditures, enter the names of the 10 most expensive SR&ED properties you acquired after December 15, 2024, used in each project. Only include the names of depreciable property that you claimed on line 390 of Form T661 in this tax year.
Line 263
Write the percentage of total operating time for each SR&ED property you acquired after December 15, 2024, from line 262. Calculate the total operating time for each tax year. Then calculate the operating time in the project as a percentage of the total operating time for the entire tax year, for each depreciable property listed on line 262.
Instructions pertaining to new line numbers in Part 3
Line 350 – Lease costs of equipment used all or substantially all for SR&ED
Enter the lease costs you incurred after December 15, 2024, for equipment that you used all or substantially all (ASA) (90% of the time or more) to carry out SR&ED in Canada. Lease costs you incurred before December 16, 2024, do not qualify for SR&ED tax incentives. You must calculate the SR&ED use as a percentage of the total operating time for each tax year. Generally, operating time means the time the equipment usually runs or functions. If your tax year began before December 16, 2024, you must calculate the SR&ED use as a percentage of the total operating time for the period after December 15, 2024. If you are using the proxy method, do not include lease costs for general purpose office equipment or furniture (GPOEF).
Line 355 – Lease costs of equipment used primarily for SR&ED
Enter "0" if you are using the traditional method.
If you are using the proxy method, enter half of the lease costs you incurred after December 15, 2024, for equipment that you used primarily (50% of the time but less than 90%) for SR&ED. Do not enter the lease costs for general purpose office equipment or furniture. You must calculate the SR&ED use as a percentage of the total operating time in the tax year. Generally, operating time means the time the equipment usually runs or functions. If your tax began before December 16, 2024, calculate SR&ED use as a percentage of the total operating time after December 15, 2024. Lease costs you incurred before December 16, 2024, do not qualify for SR&ED tax incentives.
Note: When you use the traditional method, you may be able to claim the lease costs you incurred after December 15, 2024, for equipment you used in SR&ED less than 90% of the time. Claim these costs on line 360 as overhead and other expenditures.
Line 380 – Total current SR&ED expenditures
The total current SR&ED expenditures on line 380 is the total of lines 306 to 370, not including line 315.
Line 390 – Capital Expenditures for depreciable property acquired after December 15, 2024
Enter the amount of SR&ED capital expenditures you made after December 15, 2024. Expenditures for depreciable property you acquired before December 16, 2024, do not qualify for SR&ED tax incentives.
An SR&ED capital expenditure is an expenditure you made to acquire new or used depreciable property that you intended to use in either of the following ways:
- use all or substantially all (ASA) (90% or more) of the operating time in its expected useful life to perform SR&ED in Canada
- consume ASA (90% or more) of its value to perform SR&ED in Canada
In addition, the capital expenditure must be for SR&ED carried out in Canada and the SR&ED must be related to your business. Depreciable property can only be claimed as a capital expenditure when it becomes available for use. Therefore, only the expenditures you made for depreciable property that became available for use after December 15, 2024, will qualify for SR&ED tax incentives. You must consider the intended use of the property in the year in which you claim the expenditure and over its expected useful life. When you sell the SR&ED property or convert it to commercial use, there may be an SR&ED investment tax credit (ITC) recapture. There may also be a recapture of capital cost allowance (CCA). Refer to line 440 for more details on the recapture of CCA.
Non-depreciable assets, buildings, and leasehold interests in buildings are not eligible SR&ED capital expenditures. Enter the expenditures you incurred for used equipment at line 390. These expenditures are part of the pool of deductible SR&ED expenditures but do not qualify for the SR&ED investment tax credit (ITC) (refer to line 532).
Example: After December 15, 2024, a claimant acquires land, a building, and equipment to be used ASA to perform SR&ED. The only eligible expenditure is the equipment because it was available for use after December 15, 2024. Land is a non-depreciable asset, and buildings are generally excluded. The only difference in determining capital expenditures under the traditional method and the proxy method is that you cannot include expenditures for general purpose office equipment or furniture if you use the proxy method.
Notes:
- The capital expenditures claimed on line 390 must not be included on Schedule T2SCH8, Capital Cost Allowance (CCA).
- You may be entitled to include capital expenditures that do not meet the ASA test in your SR&ED claim if they qualify as shared-use-equipment (SUE). Refer to line 504 for more details on SUE.
- There may be an SR&ED investment tax credit (ITC) recapture when you sell the SR&ED property or convert it to commercial use. Refer to the Recapture of SR&ED Investment Tax Credit Policy for information on how to calculate the recapture amount. Calculate the amount of recapture using Schedule T2SCH31, Investment Tax Credit – Corporations or Form T2038-IND, Investment Tax Credit (Individuals) and add the amount to Part I – Tax Payable. Members of a partnership can also use these forms.
Line 400 – Total allowable SR&ED expenditures
Allowable SR&ED expenditures are the total current and capital expenditures you made in the tax year. On line 400, enter the total of the amounts from lines 380 and 390.
Instructions pertaining to new line numbers in Part 4
You must separate your expenditures between current expenditures and capital expenditures.
Line 504 – Expenditures on shared-use-equipment (SUE)
You can earn a partial SR&ED ITC on depreciable property that you acquired after December 15, 2024, and you used primarily (more than 50% of the time) for carrying out SR&ED in Canada.
You could apply shared-use treatment to new equipment that:
- is not a prescribed depreciable property (PDP)
- you used for both SR&ED and non-SR&ED purposes in two periods as described below (first term and second term).
We consider you to have acquired the equipment when it becomes available for use. Therefore, expenditures you made for equipment that became available for use after December 15, 2024, may qualify for SR&ED tax incentives.
The shared-use rules are for SR&ED ITC purposes only. The SR&ED ITC calculation for SUE is the same for both the traditional method and the proxy method. The capital cost of the equipment is not part of the pool of deductible SR&ED expenditures. You must depreciate this cost under the regular capital cost allowance (CCA) rates and rules in Schedule T2SCH8.
Note: The SR&ED ITC you earned on SUE and applied to reduce payable or refunded federal taxes reduces the undepreciated capital cost of the CCA class in the next tax year in Schedule T2SCH8.
The maximum amount of an SR&ED ITC that you can earn for the acquisition of SUE is 50% of the capital cost of the equipment over two periods. If the equipment meets the requirements of both the first and second-term SUE, on line 504, claim:
- 25% of the capital cost of the equipment that was used primarily in SR&ED in the first period (first-term SUE)
- the other 25% in the second period (second-term SUE)
The first term starts when you acquired the equipment and finishes at least 12 months after the date of acquisition at the end of the first tax year. The second term starts when you acquired the equipment and finishes at least 24 months after the date of acquisition at the end of the first tax year.
Note: You should be prepared to give us documents to support the calculation of the percentage of time you used the equipment for SR&ED. For an example of first-term and second-term SUE, refer to section 3.5 of the SR&ED Shared-Use-Equipment Policy.
Line 510 – Qualified expenditures transferred to you
To transfer the performer's qualified SR&ED expenditures to you (the payer), both of you must complete and sign Form T1146, Agreement to Transfer Qualified Expenditures Incurred in Respect of SR&ED Contracts Between Persons Not Dealing at Arm's Length.
For more information on how to calculate the amount to be transferred from the performer to the payer, refer to Form T1146. The payer must report the agreed upon transferred amounts from line 020 of Form T1146 to line 510 of Form T661. The performer must report the same amount on line 546 of their Form T661.
Expenditures for depreciable property or for the right to use property that you acquired before December 16, 2024, do not qualify for SR&ED tax incentives. Only include lease costs of equipment for capital expenditures that the performer made after December 15, 2024.
Line 514 – Provincial/territorial government assistance
On line 514, enter the amounts of provincial or territorial government assistance you got for SR&ED property you acquired after December 15, 2024. Include expenditures for SUE. For a brief overview of what provincial or territorial government assistance is, see the explanation for line 429. Exclude the amount from line 514 if your provincial or territorial government assistance includes an amount for a capital expenditure that you incurred for property that you acquired and was available for use before December 16, 2024.
Line 516 – Other government assistance (other than provincial and territorial R&D tax credits)
Enter the amounts of other government assistance you got for your capital SR&ED expenditures. For a brief overview of what other government assistance is, see the explanation for line 431.
Line 518 – Non-government assistance and contract payments
Enter the amounts of non-government assistance and contract payments you got for capital SR&ED expenditures. For a brief overview of what non-government assistance is, see the explanation for line 432.
Line 532 – Prescribed expenditures not allowed by regulations
There are certain expenditures that you can include in your pool of deductible SR&ED expenditures but you cannot include in your qualified SR&ED expenditures for ITC purposes. These expenditures are called prescribed expenditures and the most common are expenditures for the acquisition of used equipment.
Expenditures for depreciable property you acquired before December 16, 2024, do not qualify for SR&ED tax incentives. Only include amounts related to expenditures for property you acquired after December 15, 2024.
Line 535 – Other deductions
Enter any SR&ED expenditures you incurred while earning income that is not subject to income tax. A business can receive an SR&ED ITC only if the business's income for a particular expenditure is subject to income tax.
Expenditures of a capital nature for depreciable property that you acquired before December 16, 2024, do not qualify for SR&ED tax incentives. On line 535, include only the amounts related to depreciable property acquired after December 15, 2024.
Line 540 – Assistance allocated to you
When a related group carries out an ongoing SR&ED project, and the amount of assistance for one of the members is more than its SR&ED expenditures, you must allocate the excess amount of assistance to the other members of the group. A related group consists of people or partnerships that the claimant had not been dealing with at arm's length when they carried out the SR&ED. Assistance refers to government assistance, non-government assistance, and contract payments as defined under lines 513 to 518.
To allocate the excess assistance, use Form T1145, Agreement to Allocate Assistance for SR&ED Between Persons Not Dealing at Arm's Length. You should file Form T1145 with Form T661. The performer must report the agreed transferred amount on line 540 of Form T661.
Expenditures for depreciable property you acquired before December 16, 2024, do not qualify for SR&ED tax incentives. Only include amounts related to expenditures for property you acquired after December 15, 2024.
Line 543 – Adjustments to purchases of goods and services from non-arm's length suppliers
Enter the difference between the amount you included as SR&ED expenditures for the purchases of goods or services from non-arm's length suppliers and the deemed amount of the SR&ED expenditure on line 543.
Expenditures for depreciable property you acquired before December 16, 2024, do not qualify for SR&ED tax incentives. Only include amounts related to expenditures for property you acquired after December 15, 2024.
Line 546 – Qualified expenditures you transferred
Enter the amount of qualified expenditures you transferred to a non-arm's length party. See the explanation under lines 510.
Line 559 – Qualified SR&ED expenditures
Enter the total of lines 557 and 558 on line 559. This is your qualified SR&ED expenditures amount for this tax year.
Instructions for Part 6
We divided Part 6 into three parts: Part 6A Project costs, Part 6B Capital expenditures, and Part 6C Shared-use-equipment.
Part 6A: Project costs
Box 759 – Lease costs of equipment
For each project, list the leased equipment costs you incurred for SR&ED after December 15, 2024. The total of this column must equal the total of lines 350 and 355 in Part 3.
Part 6B – Capital expenditures
In this part, you will give us information for the 20 most expensive capital expenditures for all of the SR&ED projects you claimed in the tax year.
Box 780 – Name of the property that was used for SR&ED
Name the 20 most expensive expenditures for depreciable property that you used for SR&ED and that you acquired after December 15, 2024. Use the same names you entered on line 262 of Part 2 of Form T661 for each of these depreciable property items.
Box 782 – Capital expenditure amount
Enter the capital cost amount of the depreciable property. Generally, the capital cost of the property means the full cost for you to acquire the property. The cost could include the purchase price, installation costs, customs and excise duties, transportation, and other acquisition costs.
Box 786 – List of project numbers
List the numbers of all the projects in which you used the depreciable property. Separate the project numbers using commas. Use the same project numbers as line 750 in Part 6A.
Part 6C – Shared-use-equipment
In this part, you will give us information for the 20 most expensive SUE expenditures for SR&ED property that you acquired after December 15, 2024, for all SR&ED projects you claimed in the tax year.
Box 788 – Name of the SR&ED property that is shared-use-equipment
Name the property that:
- consists of the 20 most expensive expenditures
- you acquired after December 15, 2024
- are shared-use-equipment you used for SR&ED
Box 790 – Purchase date
Write the date you purchased the property that is shared-use-equipment. Use the YYYY-MM-DD format to write the date.
Box 792 – 25% of the capital cost
Enter 25% of the capital cost of property that is shared-use-equipment and that you primarily used for SR&ED. Generally, the capital cost of the property means the full cost for you to acquire the property. This cost includes the purchase price, installation costs, customs and excise duties, transportation, and other acquisition costs.
Box 794 – First-term or second-term SUE
Enter "1" for first-term shared-use-equipment (SUE) or "2" for second-term shared-use-equipment (SUE).
Box 796 – Project numbers
List the numbers of all the projects in which you used the shared-use-equipment. Separate the project numbers with commas. Use the same project numbers as line 750 in part 6A.