Canada is one of the leading, research, science, development, and innovation hubs in the world. To assist companies across Canada with their innovation, Canada has invested heavily in lucrative grants and tax incentives. One specific program introduced over 70 years ago is the National Research Council of Canada Industrial Research Assistance Program (NRC IRAP). The main goal of the IRAP program is to boost the Canadian economy through job growth as well as bringing new and innovative Canadian products/services to the market. To apply for IRAP funding, many steps and qualifications must be met. Below we take a look at the IRAP application as well as how it will affect a companies SR&ED Tax Credit.
Who Can Qualify For IRAP Funding?
To qualify for IRAP funding the applicant must be a small or medium-sized business incorporated within Canada. Non-for-profit or government bodies are excluded. The applicant must have less than 500 full-time employees and is seeking innovation or technological growth through a product and/or service in Canada.
Who Do Companies Need To Contact Before Applying?
To apply for IRAP funding, an applicant must first contact NRC to see if they meet all eligibility requirements. The contact number for NRC is 1-877-994-4727. Once approved by NRC a dedicated Industrial Technology Advisor (ITA) in your area will be assigned to your company.
What Is The Role Of An Industrial Technology Advisor (ITA)?
The dedicated ITA in your area will assist the applicant through the entire process from beginning to end. The ITA will conduct either a face-to-face meeting or a telephone meeting at the being to get a better understanding of your company. He/she will establish what is needed to qualify. Please note that the ITA will not write the business plan and technical reports.
What Are The Stages To Apply?
NRC is looking for the applicant to identify their need. Is the decision to purchase a product or develop new technology. A definition of the project’s objectives, resources, timelines, and deliverables are required.
Proposal For Financial Support
At this stage, the applicant will provide an overview of their business. This will include a clear description of what is necessary to achieve the project and how the objectives will be measured/achieved. Providing a budget on how the applicant will assist in the funding is imperative.
The ITA will now assess the proposal to understand the business opportunity, evaluate the applicant’s firm, and will consider the technical projects written. An overview of financials to support the funding will be taken into consideration.
Project Management & Follow-up
The ITA will work with the applicant from being to end adding support where needed on the business objective and technical reports.
How Long Does It Take To Receive Funding?
Once the IRAP funding has been approved, an applicant can expect the following funding timeframe:
The applicant must submit monthly reimbursements to share the costs.
Can I Use An External Consultant For Assistance?
A company applying for IRAP funding can use an external consultant for assistance with writing the projects and business plan. Please note that the ITA will only work directly with the applicant and will not speak to the external consultant. IRAP funding does not cover the external consultants’ costs.
How Does Claiming IRAP Effect My SR&ED Tax Credit Claim?
IRAP only covers labour costs: a maximum of 80% for T4 employees and 50% for sub-contractors related to the R&D projects. SR&ED covers labour costs, additional overhead expenses, test materials, subcontractors and research payments. Since IRAP only covers limited costs, a company would be missing out on thousands of dollars in a cash or credit return if they are not applying for SR&ED. Below we have illustrated an example of a combined IRAP and SR&ED claim.
For additional information on the IRAP program and how to maximize your innovation return by stacking both the IRAP and SR&ED program together, please contact Braithwaite Canada.
900-2235 Sheppard Ave E
Toronto, ON M2J 5B5
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