• About Us
    • Our Team
    • What We Offer
    • Process
    • Success Stories
    • Newsletter Signup
  • Partner With Us
    • Swoop Canada
    • Venbridge
  • SR&ED Tax Credit
    • SR&ED Calculator
    • SR&ED Planning
    • SR&ED Filing Deadlines
    • SR&ED Reviews
    • SR&ED Free Webinars
  • Industries We Service
  • IRAP Funding
  • Recent News
  • 1-416-499-2861
  • info@braithwaite.ca
Free Consultation
  • About Us
    • Our Team
    • What We Offer
    • Process
    • Success Stories
    • Newsletter Signup
  • Partner With Us
    • Swoop Canada
    • Venbridge
  • SR&ED Tax Credit
    • SR&ED Calculator
    • SR&ED Planning
    • SR&ED Filing Deadlines
    • SR&ED Reviews
    • SR&ED Free Webinars
  • Industries We Service
  • IRAP Funding
  • Recent News
Twitter
Linkedin
Facebook
Envelope
  • 1-416-499-2861
  • info@braithwaite.ca
Free Consultation
  • About Us
    • Our Team
    • What We Offer
    • Process
    • Success Stories
    • Newsletter Signup
  • Partner With Us
    • Swoop Canada
    • Venbridge
  • SR&ED Tax Credit
    • SR&ED Calculator
    • SR&ED Planning
    • SR&ED Filing Deadlines
    • SR&ED Reviews
    • SR&ED Free Webinars
  • Industries We Service
  • IRAP Funding
  • Recent News
Twitter
Linkedin
Facebook
Envelope
All  ·  CRA  ·  IRAP  ·  SR&ED

Leveraging IRAP As Well As The SR&ED Tax Credit To Maximize Your Companies Innovation

By admin  Published On May 20, 2021

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.

IRAP
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

  • IRAP is a funding pool where every ITA in their specific region has allocated dollars to spend. Once the total allocated dollars have been funded by a given ITA, no further funding will be given until the following year’s application. This differs from SR&ED as there is no limit to SR&ED funding. As many companies across Canada can apply for SR&ED throughout the year.
  • There is no hard deadline when applying for IRAP. Since NRC’s fiscal year-end is March, companies are encouraged to capitalize on funding as soon as possible (April-August). With SR&ED, a company has 18 months from their fiscal year-end to apply or the claim will not be accepted.
  • 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, and materials consumed.
  • Companies approved for IRAP must show that they can cover the remaining funds not allocated by IRAP for their project. This is the monthly update that the ITA will conduct to make sure the allocated funds are being utilized correctly. With SR&ED, once approved the funds can be utilized by the company in any way, they see fit. No further follow-up is required.

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.

IRAP Claim
T4 Labour$100,000.00
Subcontractor Labour$20,000.00
80% Maximum for T4 Labour$80,000.00
50% Maximum for Subcontractor Labour$10,000.00
IRAP Claim$100,000.00

 

IRAP & SR&ED Claim
T4 Labour$100,000.00
Subcontractor Testing 80% Covered$16,000.00
Total Expenditures$116,000.00
Proxy Method 55%$63,800.00
Total SR&ED Expenditures$179,800.00
Deduct IRAP$100,000.00
Difference$79,800.00
OITC 8%$6,384.00
ORDTC 3.5%$2,793.00
SR&ED Qualifying Expenditures$70,623.00
SR&ED 35%$24,718.05
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.

Get Innovation Funding Today

Engage our experts to optimize your SR&ED claim process, manage the compliance burden and reduce uncertainty
Contact Us

Planning & Preparing for an SR&ED First-Time Claimant Advisory Service (FTCAS)
Previous Article
Canadian Corporations Entitled to 15%-35% Expenditures of Their Research & Development Each Fiscal Year
Next Article

NAVIGATION

SR&ED Tax Credit
SR&ED Calculator
SR&ED Planning
SR&ED Filing Deadline
SR&ED Reviews
IRAP Funding
Industries We Service

NAVIGATION

Our Team
What We Offer
Process
Success Stories
Newsletter Signup
Recent News
Contact Us

TORONTO

900-2235 Sheppard Ave E
Toronto, ON M2J 5B5
Office: 1-416-499-2861
Email: info@braithwaite.ca
eFax: 1-437-889-0955

MONTREAL

102-165 Saint-Zotique West
Montréal, QC H2S 1P5
Office: 1-514-495-6590
Email: contact@abgi-canada.com

Twitter
Linkedin
Facebook
Envelope
© Braithwaite Technology Consultants Inc 2023. All rights reserved.
Privacy & Cookie Policy
CACCEPT
Manage consent

Privacy Overview

We use necessary cookies to enable you to move around our website and use its features. You may disable these by changing your browser settings, but this may affect how our website functions.
We would also like to set optional analytics cookies to help us improve our website by collecting and reporting information on how you use it. However, we will not set these cookies unless you enable them by using the on/off tool below and click the save and close button. Using this tool will set a cookie on your device to remember your preferences.

For more detailed information about the cookies we use, see our Cookies Policy.
You can give or withdraw your consent at any time by clicking the ‘C’ icon at the bottom left of the website.
Necessary
Always Enabled

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.

Non-necessary

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.

SAVE & ACCEPT