Using IRAP and SR&ED Together: Stacking Rules for Canadian R&D
How Canadian companies can use IRAP grants and SR&ED tax credits together without double-counting R&D expenses.
IRAP (Industrial Research Assistance Program) and SR&ED are the two most accessed R&D funding programs for Canadian SMEs — but they work differently. Understanding how to use both without double-counting expenses is key to maximizing total funding.
How IRAP Differs from SR&ED
IRAP provides non-repayable contributions through NRC for technology development and commercialization — typically before or during product development. SR&ED is a tax credit claimed after you incur eligible R&D expenditures. IRAP is proactive funding; SR&ED is retrospective.
Stacking Rules
You cannot claim SR&ED tax credits on expenses already funded by IRAP grants. Expenses must be allocated between programs — IRAP-covered costs are excluded from your T661, while uncovered R&D costs remain eligible for SR&ED. Proper project accounting from the start prevents costly amendments.
A Practical Sequence
- Apply for IRAP early in the project for non-repayable development funding
- Track which costs IRAP covers vs. self-funded R&D throughout the year
- Claim SR&ED only on eligible, non-grant-funded expenditures at year-end
- Document the split clearly for CRA audit readiness
Find Programs and Estimate Credits
Browse IRAP and other programs in our Grant & Funding Finder, then estimate SR&ED on remaining eligible costs with the R&D Calculator.