NRC IRAP Funding Canada: What It Is, Who Qualifies, and How to Apply

What Is IRAP Funding?

The short answer: NRC IRAP (Industrial Research Assistance Program) is a Canadian government program that provides non-repayable financial contributions and advisory services to small and medium-sized businesses developing or adopting new technology.

Unlike SR&ED, which is a tax credit you claim after the work is done, IRAP is an upfront contribution—you apply before the project starts and receive funds as costs are incurred.

Administered by the National Research Council of Canada (NRC), IRAP is one of the most well-established innovation funding programs in the country. It has been operating for over 75 years, and each year it supports thousands of Canadian SMEs across sectors from manufacturing and software to cleantech and life sciences.

The program works through a national network of Industrial Technology Advisors (ITAs)—experienced professionals who are assigned to your business, help you scope eligible projects, and provide ongoing advisory support alongside the financial contribution.

Who Qualifies for IRAP?

IRAP is designed for for-profit Canadian small and medium-sized enterprises (SMEs). The core eligibility criteria are:

• Incorporated in Canada — the business must be a Canadian legal entity
• Fewer than 500 employees — IRAP focuses on SMEs; larger corporations are not eligible
• Conducting technology innovation — the project must involve developing or adopting new technology to solve a problem or improve a product, process, or service
• Technical uncertainty must exist — similar to SR&ED, the project should involve some degree of technical challenge that is not simply routine engineering or adaptation
• Commercially viable goal — the funded work should lead to a product or service that will be sold or licensed in the market

IRAP supports businesses at various stages—from early-stage startups testing a new concept to established companies modernizing their processes through technology. Sector eligibility is broad: software, hardware, biotech, advanced manufacturing, agriculture technology, and clean energy have all received IRAP support.

Who Is NOT Eligible?

• Non-profit organizations, universities, or Crown corporations
• Companies with more than 500 full-time equivalents
• Projects that are purely market research, regulatory compliance, or routine operations
• Projects that have already been completed before IRAP engagement begins

One important point: IRAP requires you to engage with an ITA before costs are incurred. Unlike SR&ED, you cannot apply retroactively for work already done.

How Much Funding Can You Get?

IRAP does not publish fixed funding amounts—contributions are determined case by case based on project scope, company size, and available budget in your region. That said, common funding ranges are:

• Youth employment contributions: typically $15,000–$30,000 per hire to subsidize salaries of post-secondary graduates working on R&D projects
• Project-based financial contributions: typically $50,000–$500,000+, covering a percentage of eligible project costs (often 50–80% of labour and some subcontractor costs)
• Advisory services: no dollar limit—your assigned ITA provides ongoing consultation at no charge throughout the project

Larger, more technically complex projects can receive multi-year contributions exceeding $1 million, though these are less common and require stronger justification.

IRAP is a contribution—meaning it is non-repayable as long as you deliver on the agreed milestones. You are not taking on debt, and there is no equity exchange.

What Does IRAP Fund?

IRAP covers eligible costs directly related to the approved technology development project. These typically include:

• Labour costs — salaries of employees directly working on the project (this is the largest eligible cost category)
• Subcontractor costs — fees paid to external contractors or consultants contributing technical work (subject to limits—usually capped at a percentage of total project costs)
• Some overhead — a portion of indirect costs may be included depending on how your project budget is structured

IRAP does not typically fund capital equipment purchases, marketing or sales activities, routine operations, or administrative overhead unrelated to the project.

How to Apply for IRAP

The IRAP process is relationship-driven rather than form-driven. There is no standard online application form—the process begins with connecting to an ITA in your region.

Step 1: Contact your regional NRC-IRAP office

Find the NRC IRAP contact for your province through the NRC website. You can also reach out through your regional innovation hub, incubator, or business development organization—many have established ITA relationships.

Step 2: Meet with an Industrial Technology Advisor

Your assigned ITA will assess your company, understand your technology project, and determine whether you meet program criteria. This is not a formal interview—think of it as a scoping conversation. Be prepared to explain the technical challenge you are solving and why it cannot be solved with existing knowledge.

Step 3: Define the project scope

Working with your ITA, you will identify the eligible project activities, define measurable milestones, and estimate the labour and subcontractor costs to be included. This becomes the basis of your contribution agreement.

Step 4: Submit your funding request

Your ITA submits your project for approval within the NRC. Timelines vary, but a typical review takes 4–12 weeks depending on regional demand and project complexity.

Step 5: Execute and report

Once approved, you begin the project and submit regular progress reports and financial claims. IRAP reimburses eligible costs as the project progresses—typically on a quarterly basis.

Key timing note: You must receive ITA confirmation that your project is being considered before incurring costs. Starting the technical work before IRAP engagement begins makes those costs ineligible.

IRAP vs SR&ED: Key Differences

Many Canadian businesses doing R&D qualify for both IRAP and SR&ED. Understanding the differences helps you decide which to pursue first—and how to use them together.

The fundamental difference is this: IRAP gives you money to do the project. SR&ED gives you money back after you have done it. Both recognize technical R&D work, but they operate through entirely different mechanisms and government bodies.

Can You Combine IRAP and SR&ED?

Yes—and for many Canadian technology companies, using both programs on the same project is the optimal strategy. However, there is a critical rule you must follow.

The double-dipping rule

You cannot claim the same dollar of expenditure under both IRAP and SR&ED. When you receive an IRAP contribution for eligible labour costs, those same costs must be reduced in your SR&ED claim. Specifically, your SR&ED expenditure pool is reduced by the amount of IRAP funding received for that work.

In practice, this means:

• If a developer’s salary is $100,000 and IRAP covers $60,000 of it, only the remaining $40,000 can be claimed under SR&ED
• Your total funding recovery across both programs is still higher than claiming either one alone—you are just not double-counting the same dollar

Why combining still makes financial sense

Even with the offset requirement, using both programs together almost always recovers more total funding than either program alone. Here is a simplified example:

Example: Software company, $500,000 in eligible R&D labour for the year

• IRAP contribution: $200,000 (covers 40% of project labour)
• Remaining SR&ED-eligible expenditures: $300,000
• SR&ED refund (at 35% for a CCPC): $105,000
• Total government support: $305,000

SR&ED alone (without IRAP) on the full $500,000 would yield $175,000. Combining adds $130,000 in additional recovery.

The key is coordination. Your IRAP project documentation and your SR&ED technical narrative need to align, and the financial adjustments must be made correctly when filing your T661. Getting this wrong is one of the most common errors we see in combined claims.

For a deeper look at how the two programs interact, see our guide on combining SR&ED with government grants in Canada.

Common Mistakes to Avoid

• Starting work before ITA engagement. This is the most costly mistake—any costs incurred before your ITA formally acknowledges your project are ineligible for IRAP. Always get written confirmation before beginning.
• Treating IRAP and SR&ED as separate processes. They share eligible work but require coordinated documentation. Running them independently often leads to errors in both claims.
• Not adjusting SR&ED expenditures for IRAP received. Failing to reduce your SR&ED claim by the IRAP amount is a compliance risk and can trigger CRA review.
• Underestimating the ITA relationship. Your ITA is not just an approver—they are an ongoing resource. Companies that engage their ITA regularly tend to access more of the program’s value than those who treat it as a one-time transaction.
• Missing SR&ED entirely after receiving IRAP. Many businesses assume that because they received IRAP, SR&ED does not apply. The two programs have different scopes—SR&ED often captures significantly more eligible work than IRAP funds.

FAQ

What does IRAP stand for?

IRAP stands for Industrial Research Assistance Program. It is administered by the National Research Council of Canada (NRC) and is often referred to as NRC-IRAP.

Is IRAP funding taxable?

Yes. IRAP contributions are considered government assistance and are included in your business income for tax purposes. This is factored into the overall funding calculation, but it does not eliminate the net benefit—a non-repayable contribution is still highly valuable even after tax.

How long does IRAP take to approve?

Approval timelines vary by region and project complexity, but most businesses can expect 4–12 weeks from initial ITA engagement to a funding decision. This is why early engagement is critical—do not wait until a project is already underway.

Can a startup apply for IRAP?

Yes. IRAP regularly funds early-stage companies, including pre-revenue startups. The key requirement is that your company is incorporated in Canada, has fewer than 500 employees, and is working on a genuine technology challenge with commercial potential. Your ITA will assess maturity and viability as part of the scoping process.

Do I need to repay IRAP funding?

No. IRAP contributions are non-repayable, provided you deliver on the agreed project milestones and reporting requirements. There is no loan component and no equity exchange.

What is the difference between IRAP and SR&ED?

IRAP is an upfront grant from the NRC for businesses actively developing technology. SR&ED is a tax credit from the CRA that you claim after completing eligible R&D work. IRAP is competitive; SR&ED is an entitlement. Both can apply to the same project, but the eligible expenditures must be offset to avoid double-counting.

Can I claim SR&ED if I already received IRAP?

Yes, but you must reduce your SR&ED expenditure pool by the amount of IRAP funding received for the same work. The claim is still worth filing—SR&ED often captures additional eligible activities that IRAP does not fund.

What industries does IRAP support?

IRAP is sector-agnostic. It has funded businesses in software development, hardware, biotech, agri-tech, cleantech, advanced manufacturing, AI, and more. What matters is whether the project involves genuine technology development, not which industry you are in.

Next Step

IRAP is a strong program—but it is just one piece of the funding picture for Canadian businesses doing R&D. Most companies that qualify for IRAP also qualify for SR&ED, and the combined value of both programs significantly exceeds either one alone.

The challenge is that the two programs require careful coordination: your IRAP project documentation, your SR&ED technical narrative, and your financial adjustments all need to align. Getting that right is where most businesses leave money on the table.

Henderson works with Canadian businesses to maximize SR&ED claims—including properly accounting for any IRAP or other government assistance received during the year. If you are already receiving IRAP and want to ensure your SR&ED claim is structured correctly, or if you are doing R&D and have not yet explored either program, a funding strategy review is a useful starting point.

Book a consultation to review your SR&ED eligibility and how it fits with any other government funding you are receiving.