“Should we do SR&ED or IRAP?” is one of the most common questions we get — and it is the wrong question. They are different kinds of programs that most R&D-active companies should use together. But because the funding interacts, the order and the mix matter.

Here is how each works, the real differences, and how to decide where to put a given dollar of R&D.

The core difference

SR&ED vs IRAP
Type
SR&ED: refundable tax credit · IRAP: cost-shared grant
Timing
SR&ED: claimed after the fact · IRAP: negotiated before the work
Rate
SR&ED: up to 35% refundable (CCPCs) · IRAP: ~60–80% of eligible costs
Certainty
SR&ED: entitlement if you qualify · IRAP: discretionary, capped budget
Access
SR&ED: file with your T2 · IRAP: through an Industrial Technology Advisor

SR&ED is an entitlement: if your work meets the scientific/technological-uncertainty test, you claim the credit on your corporate tax return — there is no application window and no competition. IRAP is a discretionary grant: you build a relationship with an Industrial Technology Advisor (ITA), scope a project, and IRAP cost-shares it from a limited annual budget.

Can you claim both?

Yes — and most R&D companies should. But IRAP funding is government assistance, and it reduces your SR&ED-eligible expenditures dollar-for-dollar. So you cannot simply add 80% (IRAP) and 35% (SR&ED) on the same salary. The combined benefit is real and large, but it has to be calculated, not assumed.

The practical model: IRAP cost-shares the funded portion of a salary; SR&ED then applies to the unfunded remainder. Sequencing the two — and documenting which dollars are which — is exactly where a lot of recovery is won or lost.

Which should you lead with?

  • Pre-revenue or early-stage, need cash now? IRAP's up-front cost-share is the faster money — but you have to build the ITA relationship before the work.
  • Already doing R&D and filing taxes? SR&ED is the reliable, non-competitive backbone — capture it every year regardless.
  • Both? Use IRAP for the funded project and SR&ED across all your qualifying R&D, coordinated so the assistance reduction is handled cleanly.

Frequently asked questions

Can I claim both SR&ED and IRAP?

Yes, and most R&D-active companies should. But IRAP funding is government assistance that reduces your SR&ED-eligible expenditures dollar-for-dollar, so the two must be coordinated — you cannot add both rates on the same cost.

Is SR&ED or IRAP better?

They are different tools. SR&ED is a non-competitive refundable tax credit you claim after the fact; IRAP is a discretionary cost-shared grant negotiated up front through an Industrial Technology Advisor. The best answer for most companies is a coordinated combination of both.

How much does each pay?

SR&ED refunds up to 35% of eligible R&D expenditures for CCPCs; IRAP typically cost-shares 60–80% of eligible salaries and subcontractor costs on an approved project. Actual recovery depends on your situation and how the two are stacked.

Which is faster to get?

IRAP can deliver cash during the project, but requires building an ITA relationship first. SR&ED is claimed with your tax return after the fiscal year, so it is predictable but not immediate. Many companies use IRAP for near-term cash flow and SR&ED as the annual backbone.

Primary source: the GovMoney Grant Finder. Program details change — verify against the official page before you apply, or check your eligibility in the Grant Finder.

Not sure how to stack SR&ED and IRAP?

We coordinate SR&ED and IRAP so the assistance reduction is handled cleanly and you capture the maximum combined recovery — without double-counting.

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