Investing in innovation on a national level drives progress and development, improving the economy and stimulating wealth creation. So, the Canadian Government is promoting an environment where innovative businesses can flourish. That’s why there are several programs that support companies carrying out research and development (R&D) activities.
The most well-known of these schemes are IRAP (industrial Research Assistance Program) and SR&ED (Scientific Research and Experimental Development).
IRAP is a grant, which will come into play before your business incurs expenses. SR&ED is a tax rebate on expenses that your business has already incurred through R&D activities.
Read on to find out what these two R&D incentive programs are, and how your company can benefit from them.
What is SR&ED?
The Canadian Government’s SR&ED program offers tax credits to Canadian businesses engaged in innovation. These tax credits are refundable in cash for most companies and represent significant financial incentives for research and development activities.
Essentially, SR&ED exists to support businesses pursuing technological advancements and seeking to clarify scientific uncertainties.
What is IRAP?
IRAP is a financial grants program for small and medium-sized enterprises (500 or fewer employees) seeking to bring pioneering innovations to market. It’s run by the National Research Council (NRC) which provides advice, funding and connections to Canadian businesses with the aim of supporting them as they take ideas to market. Next year, IRAP will be integrated into the new Canada Innovation Corporation (CIC).
The NRC has more information about how to apply for IRAP. They will assess your business’s eligibility for the grant, and if appropriate, you’ll be assigned an industrial technology adviser (ITA) who will further assess your business. Once you’ve passed this assessment, you’ll be asked to submit a proposal and then NRC will decide whether to provide the grant.
How do IRAP and SR&ED interact?
Your business can claim both an IRAP grant and SR&ED tax credit. But these benefits don’t stack. So, when claiming SR&ED against your R&D expenses, you normally reduce the claim with the amount you have already received from IRAP.
Your SR&ED adviser will ensure that your business can navigate these programs in a strategic way to maximize funding. If you would like support with your SR&ED claim, book a call now.
Are there any other government programs for Canadian businesses that incentivize innovation?
There is a range of support, both practical and financial, available to organizations and businesses in Canada.
To find out more about grants and other support for Canadian enterprises at a federal level, use Innovation Canada’s Business Benefits Finder.
You can also seek out innovation and technology grants available from your state government. Here are few examples:
- Innovation and technology grants and funding in Alberta
- Funding opportunities from the Ontario Government
You can also check our Regional Offices pages to discover more about provincial and territorial programs that promote innovation and research.
The Government of Canada is promoting innovation: don’t miss out on business benefits
Financial incentives can be the difference between outpacing your competitors and falling behind. Ensure you take full advantage of the grants and tax rebates to which you are entitled.
At Canadian SR&ED, we are passionate about supporting businesses that contribute to the world through R&D and we’d love to advise you on getting the most out of your SR&ED rebate, so please do book a call.
Supporting business that contribute to the world through R&D