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.
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.
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.
Maximize Your Stacking Potential
Our free Funding Calculator automatically checks your business parameters against both programs to determine eligibility and stacking bounds in seconds.
Calculate Stacking EligibilityRelated Funding Topics
Commercial guides & program eligibility checklists