Canada: Fee rules | Research Credit Integrity Alliance

This page sets out what Canadian federal legislation says about the fees charged for preparing claims under the Scientific Research and Experimental Development (SR&ED) tax incentives. It covers the Income Tax Act, the related CRA forms and the history of the current rules. Professional body rules are covered separately on the professional body rules page.

Summary

Question	What the official sources say
Is there a statutory cap or ban on contingency fees for SR&ED claims?	None was identified in the Income Tax Act.12
Must the fee arrangement be disclosed?	Yes. Claim preparer information, including the arrangement under which the preparer accepts consideration, must be included in the SR&ED form.12
What happens if it is missing or wrong?	A penalty of $1,000, for which the claim preparer is jointly and severally, or solidarily, liable.2
Does the preparer have a defence?	Yes, if it exercised the care, diligence and skill of a reasonably prudent person in comparable circumstances.2
When did the rules start?	For claims filed on or after January 1, 2014.3

No cap or ban in the Income Tax Act

The provisions of the Income Tax Act that deal with SR&ED claim preparers are in sections 37 and 162. They require information about the preparer and the fee arrangement to be reported, and they attach a penalty to false statements or omissions in that information.12 They do not set a maximum fee, prohibit any type of fee, or require a particular billing method.12 No other federal provision restricting contingency fees for SR&ED claim preparation was identified for this page.

The filing requirement

Section 37 of the Income Tax Act allows a deduction for SR&ED expenditures.1 Subsection 37(11) requires a prescribed form to be filed for any expenditure claimed as a deduction, on or before the day that is 12 months after the taxpayer's filing-due date for the year. The form must contain two things: prescribed information in respect of the expenditure, and claim preparer information as defined in subsection 162(5.3).1 The prescribed form is Form T661.4

If the prescribed information about an expenditure is not in the form, no deduction may be claimed for it under subsection 37(1), and an expenditure for which the form has not been filed in time is deemed not to be an SR&ED expenditure.1 The investment tax credit has a parallel condition: under the definition of "investment tax credit" in subsection 127(9), no amount is included for an expenditure if the prescribed form is not filed on or before the day that is one year after the taxpayer's filing-due date.5

Who is a claim preparer

Subsection 162(5.3) defines three terms.2

Claim preparer of an SR&ED form means a person or partnership who agrees to accept consideration to prepare, or assist in the preparation of, the form. It does not include an employee who prepares, or assists in preparing, the form in the course of performing their duties of employment.
Claim preparer information means prescribed information regarding the identity of the claim preparer, if any, and the arrangement under which the claim preparer agrees to accept consideration in respect of the preparation of the form.
SR&ED form means a prescribed form required to be filed under subsection 37(11).

The definition turns on accepting consideration. It does not depend on whether the person is an accountant, lawyer or other professional.2

The penalty

Subsection 162(5.1) provides that every person or partnership who makes, or participates in, assents to or acquiesces in the making of, a false statement or omission in respect of claim preparer information required in an SR&ED form is liable to a penalty of $1,000. That person is jointly and severally, or solidarily, liable for the penalty together with any claim preparer of the form.2

Subsection 162(5.2) gives a claim preparer a due diligence defence. The preparer is not liable if it exercised the degree of care, diligence and skill to prevent the false statement or omission that a reasonably prudent person would have exercised in comparable circumstances.2 The defence is expressed to apply to the claim preparer.2

The CRA's guide to Form T661 states that the penalty may be assessed in respect of each SR&ED claim for which prescribed information about the claim preparer is missing, incomplete or inaccurate.4 The claim preparer information penalty page covers the penalty in more detail.

Other penalties that can reach advisers

The Income Tax Act also contains general penalties for third parties who make false statements. Subsection 163.2(4) applies to a person who makes, or participates in, assents to or acquiesces in the making of, a statement to or on behalf of another person that the person knows, or would reasonably be expected to know but for circumstances amounting to culpable conduct, is a false statement that could be used for a purpose of the Act.6 Under subsection 163.2(5) the penalty is the greater of $1,000 and the lesser of the penalty the other person would face under subsection 163(2) and the total of $100,000 and the person's gross compensation in respect of the false statement.6 These provisions are not specific to SR&ED and do not depend on how the adviser is paid.6 See the penalties page.

How the rules came about

The federal budget of 2012 addressed contingency fees directly. The CRA's summary of the budget's SR&ED measures states that a study would be conducted to better understand the practice of businesses hiring consultants on a contingency fee basis, and that the Department of Finance was accepting input from stakeholders until October 1, 2012.7

The 2013 budget then proposed the present disclosure rules. According to the CRA, at that time taxpayers reported only the name of an external consultant who prepared certain parts of Form T661 and the name of the person or firm that completed the form.3 The budget measure required each preparer's business number and billing details, including whether contingency fees were used and the amount of fees payable, and a certification from the taxpayer where no preparer was involved.3 It introduced a penalty of $1,000 per SR&ED claim where that information was missing, incomplete or inaccurate, with joint and several, or solidary, liability for the taxpayer and the preparer.3

The CRA states that the measure received Royal Assent on December 12, 2013 and applies to claims filed on or after the later of January 1, 2014 and the date of Royal Assent.3 The CRA revised Form T661 in 2013 to add Part 9 for claim preparer information.8

Provincial rules

Several provinces offer their own research and development tax credits, which the CRA notes may reduce the expenditures that can be claimed federally.9 This page does not cover provincial legislation, and no provincial rule on SR&ED claim preparer fees was identified.

Sources

Government of Canada, Income Tax Act, RSC 1985, c 1 (5th Supp), section 37, subsections 37(1), (11), (11.1) and (12). https://laws-lois.justice.gc.ca/eng/acts/I-3.3/section-37.html (accessed 11 October 2026). Back
Government of Canada, Income Tax Act, RSC 1985, c 1 (5th Supp), subsections 162(5.1), (5.2) and (5.3). https://laws-lois.justice.gc.ca/eng/acts/I-3.3/section-162.html (accessed 11 October 2026). Back
Canada Revenue Agency, Budget 2013, Scientific Research and Experimental Development (SR&ED) Tax Incentive Program, section on claim preparer information and penalty. https://www.canada.ca/en/revenue-agency/programs/about-canada-revenue-agency-cra/federal-government-budgets/budget-2013/budget-2013-scientific-research-experimental-development-tax-incentive-program.html (accessed 11 October 2026). Back
Canada Revenue Agency, T4088, Guide to Form T661 (T4088(E) Rev. 20), Part 9, Claim preparer information. 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 (accessed 11 October 2026). Back
Government of Canada, Income Tax Act, RSC 1985, c 1 (5th Supp), section 127, subsection 127(9), definition of "investment tax credit", paragraph (m). https://laws-lois.justice.gc.ca/eng/acts/I-3.3/section-127.html (accessed 11 October 2026). Back
Government of Canada, Income Tax Act, RSC 1985, c 1 (5th Supp), section 163.2, subsections 163.2(1), (4), (5) and (6). https://laws-lois.justice.gc.ca/eng/acts/I-3.3/section-163.2.html (accessed 11 October 2026). Back
Canada Revenue Agency, Archived: Budget 2012, Scientific Research and Experimental Development Program, question 9. https://www.canada.ca/en/revenue-agency/programs/about-canada-revenue-agency-cra/federal-government-budgets/archived-budget-2012/archived-budget-2012-scientific-research-experimental-development-program.html (accessed 11 October 2026). Back
Canada Revenue Agency, SR&ED T661 Claim Form, 2013 Revision, Claim preparer information (October 31, 2013). https://www.canada.ca/en/revenue-agency/services/scientific-research-experimental-development-tax-incentive-program/whats-new-program/t661-claim-form-2013-revision-claim-preparer-information.html (accessed 11 October 2026). Back
Canada Revenue Agency, What are SR&ED tax incentives, section on provincial and territorial tax credits. https://www.canada.ca/en/revenue-agency/services/scientific-research-experimental-development-tax-incentive-program/what-are-sred-tax-incentives.html (accessed 11 October 2026). Back