Comparing SR&ED and IRAP: Key Differences

Key Differences

The Scientific Research and Experimental Development (SR&ED) program and the Industrial Research Assistance Program (IRAP) are both Canadian government initiatives designed to support research and development, but they differ in several key aspects:

Objective and Scope:

SR&ED: This program focuses on encouraging businesses of all sizes, in all sectors, to conduct scientific research and experimental development in Canada. It offers tax incentives, primarily in the form of refunds or tax credits, for conducting research that advances understanding in the fields of science or technology.
IRAP: IRAP is more targeted towards small and medium-sized enterprises (SMEs) and aims to stimulate wealth creation for Canada through technological innovation. It provides technical and business advisory services as well as potential funding to help develop and commercialize innovative technologies.

Application Process:

SR&ED: Companies apply for the SR&ED tax incentive after the fiscal year has ended, as part of their tax return process. They must document their research activities and expenditures.
IRAP: Requires a more proactive approach where companies typically engage with IRAP representatives, who assess the company's needs and project’s potential. The application is made before the project starts.

Focus on Commercialization:

SR&ED: While SR&ED supports research that could lead to new or improved products or processes, its focus is not explicitly on commercialization.
IRAP: Strongly focuses on the commercial potential of the R&D efforts. It supports projects that have a clear path to market and can demonstrate economic benefits for Canada.

In summary, while both SR&ED and IRAP aim to foster innovation and technological advancement in Canada, SR&ED is a tax incentive program with a broader scope and eligibility, whereas IRAP provides more targeted support, including advisory services and funding, primarily to SMEs with a clear focus on commercialization of innovative technologies.

Aspect	SR&ED	IRAP
Target	All businesses	SMEs
Purpose	R&D tax incentives	R&D funding & advice
Application	After fiscal year	Before project starts
Focus	General R&D	R&D with market potential