IRAP vs SR&ED: Quick Summary

| Feature | IRAP | SR&ED |

|---------|------|-------|

| Type | Direct grant (cash upfront) | Tax credit (refund after filing) |

| Amount | Up to $500K–$1M+ | Up to 35% of eligible R&D costs |

| Timing | Paid during project | Claimed after fiscal year end |

| Eligibility | For-profit SMBs, <500 employees | All Canadian businesses |

| Application | Competitive, advisor-led | Self-filed (or with consultant) |

| Best for | Salary reimbursement during active R&D | Post-project cost recovery |

What is IRAP?

The **NRC Industrial Research Assistance Program (IRAP)** is a direct, non-repayable grant from the National Research Council of Canada. It reimburses 60–80% of eligible salaries for Canadian employees working on technical innovation projects.

IRAP is competitive and application-based. You work with an assigned NRC-IRAP Industrial Technology Advisor (ITA) who assesses your project and recommends funding. The ITA relationship is ongoing — they provide business development advice beyond just the grant.

**Maximum funding:** $500,000 for most projects, though exceptional projects can receive more.

What is SR&ED?

The **Scientific Research and Experimental Development (SR&ED) tax credit** is Canada's largest business support program. Canadian-controlled private corporations (CCPCs) can claim a 35% refundable tax credit on the first $3 million of eligible R&D expenditures.

SR&ED is claimed through your corporate tax return (T2). You don't apply upfront — you spend on eligible R&D activities during the year, then claim the credit when filing taxes.

**Key distinction:** SR&ED is a tax credit, not a grant. You spend first, then receive the credit. IRAP reimburses you as you go.

Which Should You Apply For?

Apply for IRAP if:

You're actively working on a technical R&D project right now

You need cash flow to hire developers, engineers, or scientists

Your company has fewer than 500 employees

You want an advisor relationship beyond just funding

Apply for SR&ED if:

You've already spent money on R&D this fiscal year

You want to recover costs after project completion

You run a larger company (no employee size limit)

You're in any industry (software, manufacturing, food tech, cleantech)

Apply for Both (Most Common Strategy):

Many Canadian companies **stack IRAP and SR&ED** on the same project. IRAP provides cash during the project; SR&ED provides a tax credit afterward. The two programs are designed to complement each other.

**Important:** You must disclose IRAP funding when filing SR&ED claims, as the combination affects your eligible expenditure base.

Real-World Example

**Scenario:** A 25-person Toronto software company spending $800,000/year on R&D:

**IRAP:** Receives $480,000 (60% of $800K salary costs) paid quarterly during the year

**SR&ED:** Claims 35% refundable credit on eligible costs — approximately $98,000 returned with tax filing

**Total combined benefit: ~$578,000** on $800,000 of R&D spending.

How GrantWise Helps

GrantWise Canada's AI application writer is specifically trained on IRAP and SR&ED requirements. It helps you:

Determine which R&D activities qualify for each program

Draft your project description in language that resonates with IRAP ITAs

Prepare your SR&ED T661 form narrative

Calculate your estimated benefit before you apply

IRAP vs SR&ED: Which Federal Grant Is Right for Your Canadian Business?