Quick Answer: Which Should You Choose?
Choose IRAP if you...
Need upfront cash before spending. Are an SME with under 500 employees. Want hands-on advisory support. Have a defined R&D project with clear milestones.
Choose SR&ED if you...
Have already incurred R&D expenses. Want to maximize tax savings. Are any size company. Have ongoing R&D activities integrated into operations.
Pro tip: Most companies should apply for BOTH programs. They're complementary, not exclusive.
Complete Comparison Table
All the key differences between IRAP and SR&ED at a glance.
| Feature | IRAP | SR&ED |
|---|---|---|
| Full Name | Industrial Research Assistance Program | Scientific Research & Experimental Development |
| Administered By | National Research Council Canada (NRC) | Canada Revenue Agency (CRA) |
| Funding Type | Direct Grant (Non-Repayable) | Tax Credit (Refundable) |
| Maximum Amount | Up to $1 million per project | Up to 68% of eligible expenditures (no cap) |
| When You Receive Funds | Before/during R&D work (milestone payments) | After fiscal year-end (with tax return) |
| Company Size Limit | SMEs only (500 or fewer employees) | No size limit (any business) |
| Application Timing | Before starting R&D project | Retroactive (up to 18 months after fiscal year) |
| Approval Process | 2-4 weeks for initial review | 8-16 weeks typical (after filing) |
| Advisory Support | Yes - dedicated ITA advisors | No - purely financial |
| Technical Staff Required | Yes - must have in-house technical capability | No - can claim contracted R&D |
| Reporting Requirements | Milestone reports throughout project | Annual claim with tax return |
| Eligible Expenses | Labour, contractors, materials, equipment | Labour, materials, overhead, some contractors |
| Audit Risk | Low (upfront approval) | Moderate (CRA may review claims) |
IRAP (Industrial Research Assistance Program)
National Research Council Canada
IRAP is Canada's premier innovation assistance program for SMEs. Beyond funding, IRAP provides access to Industrial Technology Advisors (ITAs) who offer guidance, connections, and strategic advice throughout your R&D journey.
What IRAP Funds
- Labour costs for technical staff directly working on R&D
- Contractor fees for specialized expertise you don't have in-house
- Materials and supplies consumed during R&D activities
- Equipment leasing (typically not capital purchases)
Ideal For
- Early-stage tech companies needing upfront funding
- SMEs with defined R&D projects and clear milestones
- Companies wanting mentorship along with funding
- Businesses in technology, manufacturing, or clean tech sectors
Considerations
- Requires pre-approval before spending (can't claim retroactively)
- Must have in-house technical staff (can't fully outsource R&D)
- Ongoing reporting and milestone tracking required
SR&ED (Scientific Research & Experimental Development)
Canada Revenue Agency
SR&ED is one of the world's most generous R&D tax incentive programs. It provides refundable tax credits on eligible R&D expenditures, making it valuable for companies of all sizes conducting innovation activities in Canada.
What SR&ED Covers
- Labour costs for employees directly performing R&D work
- Materials consumed during experimental development
- Overhead/proxy amounts for R&D support costs
- Some contract R&D (at reduced rates)
Tax Credit Rates (2026)
- 35% federal refundable for CCPCs on first $3M (enhanced rate)
- 15% federal for amounts over threshold or non-CCPCs
- Up to 33% provincial additional credits (varies by province)
- Combined up to 68% in provinces with highest rates
Ideal For
- Companies with ongoing, integrated R&D activities
- Businesses wanting to claim past R&D expenses
- Larger companies (no size restrictions)
- Any industry conducting systematic investigation or experimentation
Considerations
- Must document R&D activities thoroughly (audit-ready)
- Funds come after year-end (not upfront)
- CRA may audit claims (keep detailed records)
Which Program Fits Your Situation?
Use these scenarios to guide your choice.
"I need cash now to start my project"
You have a great R&D idea but lack the funds to get started.
IRAP is ideal"I already spent money on R&D last year"
You've been doing innovation work and want to recover some costs.
SR&ED is your option"I want guidance, not just money"
You need strategic advice and industry connections alongside funding.
IRAP provides advisors"My company has 1,000+ employees"
You're a larger enterprise looking for R&D incentives.
SR&ED has no size limit"I want to maximize R&D returns"
You're strategic about funding and want the best ROI.
Use BOTH programs"I hate paperwork and reporting"
You want minimal administrative burden.
SR&ED is annual (one claim)Frequently Asked Questions
IRAP provides upfront funding (grants) for R&D projects, while SR&ED is a tax credit program that reimburses eligible R&D expenditures after you've incurred them. IRAP requires pre-approval before spending, SR&ED can be claimed retroactively. IRAP provides advisory support plus funding; SR&ED is purely financial.
Yes, you can and should apply for both programs. They are complementary, not mutually exclusive. IRAP funding reduces your net costs, and remaining eligible expenditures can still qualify for SR&ED tax credits. Many companies use both programs simultaneously to maximize their R&D funding.
It depends on your situation. IRAP provides up to $1 million per project as direct funding. SR&ED provides up to 68% refundable tax credits (35% federal + up to 33% provincial) on eligible expenditures with no cap. For large R&D investments, SR&ED often provides more total funding. For smaller companies needing upfront cash, IRAP is often more valuable.
IRAP: Application review takes 2-4 weeks, then funding flows as you submit milestone claims (usually monthly). SR&ED: Claims are filed with your tax return, and refunds typically arrive 8-16 weeks after filing for straightforward claims, but can take 6-12 months if CRA conducts a detailed review.
IRAP is for Canadian SMEs with 500 or fewer full-time equivalent employees. The company must be incorporated in Canada and be for-profit. SR&ED has no size restrictions - any Canadian business conducting eligible R&D can claim, from sole proprietors to large corporations.
Yes, IRAP requires that your company has technical staff who will perform the R&D work. Contractors can supplement but cannot replace your internal technical capability. This is one key difference from SR&ED, where contracted R&D can sometimes qualify (though at reduced rates).