The two most lucrative incentives for companies incorporated in Canada to take advantage of are The National Research Council of Canada Industrial Research Program (NRC IRAP) and the Scientific Research and Experimental Development tax credit (SR&ED). Many companies are familiar with one over the other however are not aware that they can claim both incentives to maximize their research and innovation. Below is a brief comparison between the two programs as well as an example of how a company can claim both IRAP and SR&ED.
The NRC IRAP program is one of Canada’s longest-standing government assistance programs introduced over 70 years ago for Canadian incorporated small and medium-sized companies with less than 500 employees conducting research or innovation. The main goal of the 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 an IRAP claim, a company must first contact NRC at 1-877-994-4727. This conversation with NRC will lead to a decision on whether to proceed with the application or not. If selected, a designated Industrial Technology Advisor (ITA) will be assigned to your company and will provide templates and advice throughout the process of submitting the claim. The company must provide a business plan, technical write-ups, company objectives, and a budget forecast of how the funding will be allocated, upon when the ITA will decide if they are approved for funding or not. If approved by the ITA, monthly reporting will be required to show how the funds are being allocated and spent. IRAP funding can award as little as $50,000 to $10 million per applicant.
How IRAP is different from SR&ED
Claiming both IRAP & SR&ED
As mentioned above, IRAP only covers labour 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 IRAP claim on its own versus a claim with IRAP and SR&ED included.
|80% Maximum for T4 Labour||$80,000.00|
|50% Maximum for Subcontractor Labour||$10,000.00|
|IRAP & SR&ED Claim|
|Subcontractor Testing 80% Covered||$16,000.00|
|Proxy Method 55%||$63,800.00|
|Total SR&ED Expenditures||$179,800.00|
|SR&ED Qualifying Expenditures||$70,623.00|
|SR&ED & IRAP Total||$133,895.05|
As you can see with the example provided above, by applying for the SR&ED tax credit in Ontario, this company increased their return on innovation by $33,895.05.
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.
Necessary cookies are absolutely essential for the website to function properly. This category only includes cookies that ensures basic functionalities and security features of the website. These cookies do not store any personal information.
Any cookies that may not be particularly necessary for the website to function and is used specifically to collect user personal data via analytics, ads, other embedded contents are termed as non-necessary cookies. It is mandatory to procure user consent prior to running these cookies on your website.