Canadian Federal government offers two incentive programs to facilitate companies to enhance research and development; the Industrial Research Assistance Program (IRAP Funding) and the Scientific Research and Experimental Development (SR&ED). Both programs are designed to help businesses conduct research and development to increase economic growth.
Although both programs share the same goals, but there are some differences that confuse business owners to decide their target program to apply.
The differences between IRAP Funding and SR&ED Programs
SR&ED is governed by Canadian Revenue Agency (CRA) and encourages all types of businesses (privately owned, publicly owned, partnerships and individuals) to take part in research and development in Canada. This program provides incentives in the form of tax refund or tax credits. Canadian Controlled Private Corporations (CCPC) can enjoy greater incentives based on different criteria.
The National Research Council-Industrial Research Assistance Program (NRC-IRAP) is Canada’s premier innovation assistance program for small and medium-sized enterprises (SMEs). The program aims at stimulate wealth creation for Canada through technology innovation and financial support for development and commercialization of products. It provides funding to small- and mid-sized enterprises (SME) with fewer than 500 employees. The program does not only provide financial assistance to companies but also provide strategic and technical support.
The companies who have done research and development and fall in any of the below categories are eligible for SR&ED:
- Experimental Development: Investigations, trials and experiments to create new or improve existing products and processes.
- Applied Research: Scientific research with a specific goal for how it will be applied.
- Basic Research: Research to advance scientific knowledge without any specific goals.
While IRAP Funding provides upfront cash to businesses before they start any research and development projects, it requires proper business planning about how the money will be spent. To be qualified companies have to:
- Be profit driven company;
- Have between 1 and 500 employees;
- Incorporated with minimum of two years of establishment;
- Have objectives of making money through innovative technology.
The timeline of application differentiates SR&ED and IRAP application process. CRA encourages companies to apply for SR&ED Tax Credits of their already spent research & development expenses. IRAP is designed for research and development startups. The companies who cannot afford technical risks and uncertainty before starting any research project can apply for the fund. After consulting with your local Industrial Technology Advisor (ITA) and approval of your project, the IRAP release funds in multiple instalments throughout the project progress.
For further information for eligibility of your business to any of the funding programs check out Assessment LookUP and Fund Calculator. To take advantage of our 30min free no-obligation consulting service either contact us or fill out the request form.
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