The Canadian federal government offers two incentive programs to businesses conducting research and innovative projects: the Scientific Research and Experimental Development (SR&ED) and the Industrial Research Assistance Program (IRAP).
The SR&ED and IRAP are two of the largest federal incentives in Canada and share a goal of encouraging economic growth through research and development projects.
The two programs have their differences, and for Canadian business owners deciding which is best for their company can be difficult. Here are the key aspects of the SR&ED and IRAP.
Governing bodies and target applicants
SR&ED—The program’s mandate is to “encourage Canadian businesses of all sizes and in all sectors to conduct research and development in Canada.” The Canadian Revenue Agency governs the program and provides funding in the form of a tax refund or credit.
A variety of industries are included in the program’s scope, including, but not limited to: oil and gas, manufacturing, environmental technologies, food processing, agriculture, and pharmaceuticals.
IRAP—Operating as a federal grant program, the IRAP is headed by the National Research Council. It is one of Canada’s oldest funding incentives and has provided developing enterprises with grants for over 60 years.
The IRAP aims to “stimulate wealth creation for Canada through technological innovation” by investing in projects that strengthen the national technology industry. The program is open to small and medium-sized companies with fewer than 500 employees.
How and what kind of resources provided
SR&ED—Funding through the SRED is given in the form of a tax credit or refund with the amount based on each company’s tax claim.
Greater funding is given to Canadian Controlled Private Corporations (CCPC), which involves a variety of criteria but essentially requires companies to be a Canadian owned and operated private corporation.
Credits are issued for a variety of expenses, such as equipment and material costs, employee wages, and overhead spending.
IRAP—The IRAP has offered non-repayable grants up to $1 million, but generally range from $10,000 to $250,000. The application process is screened over a variety of stages, taking into consideration the company’s prospects of further development.
The program goes beyond financial assistance by providing strategic support and partnering companies with establishing industry professionals. Approved applicants are linked with Industrial Technology Advisors (ITA) for one-on-one assistance.
While there is greater guidance available under the IRAP, there are also increased expectations on behalf of the company. Applicants are usually required to submit a detailed business plan with an explanation of how the funds will be used, and there is more contact between the corporation and ITAs.
Why Work with SR&ED Consultants?
Like most government incentives, both the SR&ED and IRAP require an in-depth understanding of the programs to take advantage of available resources.
Professional consultants like ours at Enhanced Capital Recovery (ECR) are available to help clients capitalize on their applications and benefit most from the company they worked hard to build.
Our SR&ED consulting team, with offices in Vancouver, Edmonton and Toronto has brought success to numerous organizations, including those whose claims were initially turned down by the Canadian Revenue Agency. Your company will work with SR&ED Consultants knowledgeable in your industry to recover the most funding possible.
For a no-obligation consultation, submit a contact form and our team will arrange a free assessment of your case.