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SR&ED vs. IRAP: Which Canadian R&D Program is Best for Your Startup?
Compare eligibility parameters, funding scopes, and approval speed side-by-side to optimize your capital stack.
Parameter
Scientific Research and Experimental Development (SR&ED)
Industrial Research Assistance Program (IRAP)
Agency
Canada Revenue Agency (CRA)
National Research Council (NRC)
Funding Scope
Up to 64% of R&D salaries refunded
$50,000 to $500,000+ (covers 50-80% of wages)
Funding Type
Tax Credit
Grant
Difficulty
Moderate
Competitive
Intake Status
Rolling Intake
Rolling Intake
Scientific Research and Experimental Development (SR&ED) Summary
Advantages
- •Non-competitive: if you do qualifying work, you get paid by law.
- •Covers salaries, contracts, materials, and overhead.
- •Retroactive claim up to 18 months post-fiscal year end.
Limitations
- •Paid after the work is completed and tax year is filed.
- •High compliance documentation and technical audit risks.
- •Routine software development without technical uncertainty is often audited.
Industrial Research Assistance Program (IRAP) Summary
Advantages
- •Paid upfront during project execution (monthly reimbursements).
- •Builds a valuable relationship with an NRC ITA advisor.
- •Excellent credibility stamp for early-stage tech companies.
Limitations
- •Highly competitive: ITAs select only high-commercial-potential projects.
- •Must build relationship first (no cold proposal applications).
- •No retroactive funding for already completed work.
Can You Stack Them?
Yes, you can stack them. IRAP funds R&D salaries upfront (50–80%), and SR&ED refunds up to 35–64% of the remaining salary and overhead expenditures. However, any government grant received (including IRAP) reduces the pool of eligible expenditures for your SR&ED calculation. Stacking both is highly recommended but requires precise bookkeeping.
The Expert Verdict
For early-stage technology startups with active payroll, IRAP is the optimal upfront choice to cover immediate dev wages, while SR&ED should be filed annually to recover tax credits on the non-subsidized portions of your development spend.
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Our free Funding Calculator automatically checks your business parameters against both programs to determine eligibility and stacking bounds in seconds.
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Related Funding Topics
Commercial guides & program eligibility checklists