The claim has a harder deadline than the return
Your T2 is due six months after year-end, but the SR&ED claim inside it runs on its own clock: the prescribed forms, Form T661 and Schedule 31, must be filed within 12 months of the return's due date, 18 months after year-end in total. That deadline is statutory. The CRA has no discretion to extend it, and a claim that misses it is not late, it is gone.
Loss years lull founders here. With no tax owing, the T2 feels optional, and it quietly slides past the month where the claim dies. We file Corporate Tax Filing clients on the six-month schedule regardless of profit, because the return is the delivery vehicle for everything a startup is owed.
Eligible work is narrower than hard work
SR&ED pays for resolving technological uncertainty through systematic investigation, not for building features. A recommendation engine that forced you to test three architectures because none was known to meet your latency constraint can qualify; wiring a payments page, restyling the dashboard and routine bug fixing cannot, however difficult they were. The claim stands on that distinction, and so does the review.
What survives a reviewer is contemporaneous evidence: sprint tickets that name the uncertainty, Git history that shows the attempts, and time records tying named developers to eligible projects as the year runs, not reconstructed the week the T661 is drafted. The proxy method then adds an overhead amount computed at 55% of the eligible salary base, which is why payroll records anchor the whole file. When the CRA does select a claim for review, our CRA Audit & Review Support handles the financial defence alongside your technical leads.
Refundable means a cheque, not a discount
For a qualifying Canadian-controlled private corporation, the enhanced federal credit runs at 35% of eligible spending up to an expenditure limit, and it is refundable: the CRA pays it in cash even when the corporation owes no tax. Ontario adds a refundable innovation credit of its own for qualifying corporations, plus a smaller non-refundable research credit that waits for profitable years.
Two honest notes belong here. The Ontario Interactive Digital Media Tax Credit gets pitched to every software company, and most B2B SaaS products are simply not eligible interactive products; we say so rather than filing hope. And non-capital losses are an asset with mechanics of their own, carried back up to 3 years or forward up to 20, which is one more reason a loss-year return deserves accuracy instead of shrugs.
HST returns that always end in a refund get read before they get paid
SaaS sold to Canadian customers takes the rate of the customer's province: 13% for an Ontario subscriber, 5% in the GST-only provinces, the higher Atlantic rates in the HST provinces. Sales to non-resident customers with no Canadian presence are generally zero-rated, taxed at 0% while your input tax credits on hosting, tools and rent stay fully claimable. A startup selling mostly abroad therefore files HST returns that end in a refund, period after period.
The CRA routinely reviews refund returns before paying them, so the position needs its evidence ready: billing-system tax tables set per province, which Stripe Tax handles once configured properly, address evidence supporting the zero rate, and clean ITC documentation. Two configuration choices carry money: electing monthly filing brings refunds in at the pace a growing burn appreciates, and Quebec, British Columbia, Saskatchewan and Manitoba run their own sales taxes that can reach software, worth professional attention once sales there grow.
The calendar for a company that files to collect
| When | What is due |
|---|---|
| 2 months after year-end | Any balance of corporate tax; many small CCPCs get 3 months |
| 6 months after year-end | The T2 itself |
| 18 months after year-end | Final SR&ED reporting deadline, T661 and Schedule 31, no extensions |
| Last day of February | T4s for payroll, T5s for any dividends paid |
| Per your election | HST returns; monthly filing if refunds should arrive monthly |
The slips row matters more than founders expect, because investor diligence reads filed T4s as proof the payroll in your model actually happened. And the claim itself is only as strong as the books beneath it, which is why our End-to-End Accounting clients walk into filing season with developer time already coded to projects. We work with software companies across Mississauga and the GTA, with every engagement quoted in writing after a free 15-minute discovery call.
Source: CRA — Scientific Research and Experimental Development (SR&ED) tax incentive program.
