Double Dipping? How to Stack SR&ED with Grants, IRAP & Provincial R&D Incentives

Introduction

Many businesses treat SR&ED as standalone. The smarter path is to layer it with grants, IRAP contributions, and provincial credits. But stacking comes with traps: double counting, repayment clauses, and audit scrutiny. Done right, though, you can turbocharge your R&D funding.

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Grant vs Credit: Key Differences

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Clean Stacking Principles

1. Separate cost pools: Don’t claim the same labour or expenditure twice
2. Attribution by experiment: Map incremental tasks funded by grant vs tasks claimed in SR&ED
3. Narrative clarity: Clearly label which portion is grant-funded vs credit-claimed
4. Respect program restrictions: Some grants block overlap or have exclusivity clauses
5. Record tracking / audit trail: Separate project codes, logs, subaccounts

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Example Scenario

A company receives an IRAP grant covering 50% of prototyping labour. They reserve the other 50% of labour and material costs for SR&ED. Then they layer a provincial R&D credit on top of the net base. The narrative clearly delineates funded vs claimed work streams, and logs separate each task’s time and cost.

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Pitfalls to Avoid

• Overclaiming subcontractor work if partially grant-funded
• Vague narratives that conceal overlap
• Poor internal cost attribution systems leading to audit adjustments
• Grant terms that penalize overlapping claims

Implementation Tips

• Use project codes / cost centers for funded vs creditable work
• Maintain experiment logs annotated by funding source
• Reconcile cost schedules with grant claims pre-submission
• Use internal review checkpoints to spot overlap early

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Net Benefit & ROI

Stacked funding can significantly increase your effective subsidy rate. Rather than relying on SR&ED alone, you may combine upfront grants for high-risk phases with SR&ED for mid/late experimentation, and provincial credits for final eligible work.

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How GovMoney Can Help

We host a Funding Stack Workshop, assist with carve-out design, simulate net funding scenarios across SR&ED, IRAP, and provincial incentives, and build tracking systems that survive audits.