Reviewed by Logan Hanson, BSc, CPA. Last verified against CRA guidance on July 29, 2026.
Yes, if the two are structured so the funding does not overlap. IRAP (the Industrial Research Assistance Program) and SR&ED are both federal support for R&D, and many companies use both. The catch is that IRAP is government assistance, which reduces the pool of expenditures you can claim for SR&ED. Handled carefully, the two programs coexist cleanly. Handled carelessly, you either double-count and invite an overlap issue, or over-reduce and leave money on the table.
Government assistance reduces the SR&ED expenditure pool, but only for the specific expenditures it funded. If IRAP reimbursed part of a particular engineer’s salary, that portion comes out of the SR&ED base. The rest of that salary, and every expenditure IRAP did not touch, stays fully claimable. The reconciliation has to happen at the level of employee, time, and reimbursement amount, not as a single lump-sum subtraction.
Reducing the entire SR&ED claim by the full IRAP contribution. It feels conservative and safe, but it is simply wrong, and it quietly understates the claim. IRAP only funded certain expenditures. Subtracting its full value from the whole pool strips out eligible costs it never touched. The fix is to scope the reduction precisely to what IRAP actually reimbursed.
You can see how the CRA treats government assistance on the SR&ED program pages.
An AI and machine learning software company with five employees had claimed small amounts in prior years but never documented the full scope of its technical work, and needed to coordinate a claim alongside an existing IRAP contribution. The real R&D was substantial and ongoing across multiple research threads. The problem was twofold: the documentation had never captured the depth of the experimentation, and the team had been reducing the SR&ED amount by the entire IRAP amount instead of scoping it properly.
We documented the uncertainty and experimentation across the full scope of the work, and structured the claim against the IRAP funding so every dollar was counted exactly once, with IRAP reducing only the expenditures it actually funded. Correcting the improper reduction increased the claim by over $20,000, landing at $210,000 alongside about $150,000 of IRAP, with no overlap issues raised. This is one of eleven engagements in our full SR&ED case studies document.
Suppose a Canadian-controlled private corporation (CCPC) has $750,000 of otherwise-eligible SR&ED expenditures, and IRAP reimbursed $150,000 of specific salary costs within that total. Only that $150,000 comes out of the pool, leaving a qualifying base of $600,000. At the enhanced 35% refundable rate, that is roughly $210,000 in federal credit, before the prescribed-proxy overhead amount and provincial credits, which usually push the total higher.
Now compare the mistake. If the company had instead subtracted the full $150,000 from an already-reduced figure, or excluded costs IRAP never funded, the base would drop further and the credit with it. That is exactly the kind of improper reduction that costs real money. For a CCPC, the credit is refundable, paid as cash even with no tax owing, up to the enhanced ceiling on the first $6 million of expenditures, for up to $2.1 million per year, which phases out with taxable capital and is shared among associated corporations.
If you receive IRAP and plan to claim SR&ED, work through this.
Coordinating SR&ED with IRAP is a precision exercise, and getting it wrong in either direction costs you. We document the full scope of the work and reconcile it against the IRAP funding so every dollar is counted exactly once, on a flat fee billed monthly, published openly and roughly half the lifetime cost of percentage-based firms. We are the only SR&ED provider we are aware of that publishes its pricing.
The work is backed by a 75% approval guarantee: if the CRA approves less than 75% of the filed claim, we waive our fees. If there is no eligible work in your year, you don’t pay. For more, see our guides on maximizing refundable SR&ED claims and refundable SR&ED credits for tech startups.
SR&ED and IRAP work well together when the funding is reconciled precisely, so each dollar is counted exactly once and no eligible cost is over-reduced. Done right, you keep the full value of both. A free consultation usually tells you within an hour whether your current coordination is leaving money behind. For the bigger picture, see our State of SR&ED hub.
Yes, if the two are structured so the funding does not overlap. Government assistance like IRAP reduces the SR&ED expenditure pool, so the programs must be reconciled carefully rather than claimed independently.
Yes, but only for the specific expenditures IRAP actually funded. Reducing the entire SR&ED pool by the full IRAP amount is a common and costly mistake that understates the claim.
You reconcile by employee, by time, and by reimbursement amount so each dollar is counted once, and only the IRAP-funded portion reduces the SR&ED base. Everything else remains fully claimable.
Over-reducing the SR&ED claim by subtracting the full IRAP contribution, instead of scoping the reduction to the exact expenditures IRAP covered. This quietly leaves eligible credit unclaimed.
Not if the claim is built so overlap cannot occur. When every dollar is clearly counted once and the reconciliation is documented, there is nothing for a reviewer to flag.
We document the full scope of the technical work and structure the claim against the IRAP funding so every dollar is counted exactly once, on a published flat fee.
This article is general information, not tax advice. Tax figures depend on your corporation type, province, and taxation year.
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