Timing Is Everything: The SR&ED 18-Month Rule (and How to Never Miss It)

SR&ED is one of the most generous programs in Canada. It can turn hard-won experiments into real dollars back in your account. But it’s also unforgiving on timing. Miss the window and the opportunity is gone, no matter how good the work was.

Here’s a clear, no-drama guide to the 18-month rule, common pitfalls, and a simple system to keep you comfortably ahead of every deadline.

Why Timing Matters

A successful claim is not a last-minute scramble. It’s the result of steady, well-timed steps through the year. Collecting evidence as you work, lining up the financials, and filing cleanly. When you respect the timeline, two good things happen:

1. your claim size is maximized, and

2. on the chance your claim is audited, it feels like a formality, not a fight.

Quality is never accidental; timing is part of it.

The 18-Month Rule, Plain and Simple

For corporations, your SR&ED reporting deadline is 18 months after your fiscal year end. That’s defined as:

• T2 due date: 6 months after year-end

• SR&ED deadline: 12 months after that T2 due date

• Net result: 18 months after year-end

Think of it as a two-step clock: +6 months, then +12 months.

And YES - you can amend a previously filed T2 that didn't initially include a SR&ED claim.

Concrete Examples

• FYE September 30, 2025 → T2 due March 31, 2026 → SR&ED filing deadline March 31, 2027.

• FYE December 31, 2025 → T2 due June 30, 2026 → SR&ED filing deadline June 30, 2027.

• FYE April 30, 2025 → T2 due October 31, 2025 → SR&ED filing deadline October 31, 2026.

Two important notes:

• “Filing a return” and “filing SR&ED” are not the same thing. Your tax return can be on time while your SR&ED schedules are missing. The program looks for prescribed SR&ED forms filed on or before the deadline.

• Provincial R&D credits often require additional schedules. We prepare those alongside the federal claim so everything moves in lockstep.

• An amended claim does NOT affect your chances of being audited.

Common Timeline Misfires (and Easy Fixes)

1) “We’ll just do it next year.”

SR&ED is strictly tied to each fiscal year and its deadline. If the 18-month window closes, you cannot add last year’s work later. Fix: set your internal “latest start” date at 12 months after year-end and aim to submit well before 18 months.

2) “We filed our T2, so we’re covered.”

Not unless the SR&ED forms were included (or filed as a timely amendment). Fix: confirm that T661 and the ITC schedules are accounted for. We double-check this with your accountant before submission.

3) “We’ll collect evidence at the end.”

Memory fades and tickets disappear. Fix: keep light, contemporaneous evidence as you go such as Jira tickets, Git commits, test plans, prototype photos, bench notes. These turn the raw trail into a clear narrative.

4) “We have grants, so timing is fuzzy.”

Assistance changes the math, but not the deadline. Tell your consultant about IRAP or other support early; they should treat it properly in the financials while keeping the same filing clock.

5) “We’re already mid-crunch.”

If the window is still open, a solid SR&ED consultant can fast-track. If it’s closed, they turn immediately to the current year so you don’t miss two in a row.

What Goes Into a Timely Filing

A clean, on-time claim has two pillars:

• Technical story: what problem you tried to solve, why it was uncertain, the experiments you ran, and what you learned—even if it failed.

• Financial schedules: eligible Canadian salaries, materials, Canadian contractors, and overhead (traditional) or the proxy method (the most common, and often most efficient).

Your SR&ED consultant should map your real work to SR&ED’s definition, tie every dollar to evidence, and file the right forms before the clock runs out.

Lavender’s Timing Playbook

We don’t react to the process; we drive it forward. Here’s the rhythm we keep with clients:

1. Mid-Year Proactive Check-In

   Light touch. We confirm eligible projects, spot gaps in evidence, and coach your team on “good enough” record-keeping.

2. Year-End Kickoff

   As your fiscal year closes, we lock the scope and timeline and set dates for the technical interview and financial hand-off.

3. Technical Preparation

   A focused session with your lead(s). We extract the uncertainty, experiments, and outcomes. You get a polished technical report drafted for review.

4. Financial Preparation

   We compile eligible costs, select proxy vs. traditional, factor in assistance, and prepare the tax schedules cleanly.

5. Review & Submission

   You review once; we submit with your accountant well ahead of the deadline.

This cadence keeps you comfortably on time and lowers everyone’s blood pressure.

If You’re Tight on Time

You still have options, just move quickly:

• Under 90 days to deadline: fast-track technical interviews, prioritize the highest-value projects, and focus on evidence you already have.

• Under 30 days: we triage, narrow scope to the cleanest candidates, and file.

• Window closed: we pivot to the current year immediately and set your mid-year check-in. One missed year is a lesson; two is a pattern. We don’t let patterns form.

Quick Checklist

• Know your fiscal year end (not your calendar year).

• Add +6 months (T2 due date).

• Add +12 months more (SR&ED deadline).

• Keep light, real-time evidence as you work.

• Start the claim well before the 18-month date.

• File the prescribed forms with (or shortly after) your T2.

• Align with your accountant early so federal and provincial schedules move together.

You’re in Safe Hands

Lavender believes SR&ED should feel like a natural extension of your innovation process. Transparent, manageable, and built around how your team actually works. If you’re unsure about your dates, send us your fiscal year end and we’ll confirm your deadline in one line, then set a plan that keeps you ahead of it.

We make curiosity count.