The Canadian AI Funding Guide

The granddaddy of Canadian innovation funding, and it got significantly better in 2026. The expenditure limit doubled to $6M, and capital costs are now eligible again.

The key question with SR&ED is whether your work creates new technical knowledge — not just uses existing tools. If you're implementing ChatGPT with a custom system prompt, that's probably not SR&ED. If you're building a proprietary model, fine-tuning on your data, or developing a new AI-powered process where the outcome isn't guaranteed, you likely qualify.

NRC IRAP is one of the most underused programs in Canada. Non-repayable funding, covers up to 80% of salary costs and 50% of subcontractors. In 2026 they launched a dedicated AI Assist stream with $100M over five years.

Not a grant — a loan. But worth knowing because it covers things grants don't: consulting fees, software acquisition, implementation costs. Up to $5M, up to 8 years to repay. If you're doing a serious AI implementation and need capital to fund it, cleaner than a traditional business loan.

Montreal-based innovation supercluster. Multiple funding streams including an AI Training Program (up to $1M per company) and industry-led project funding covering up to 40% of eligible expenses. Projects need to be collaborative — multiple stakeholders involved.

Check current intake status before applying.

Connects your business with university AI researchers. $15,000 per 4–6 month internship, with enhanced funding for AI projects. Lower dollar amounts but a good way to get research capacity without hiring full-time.

Quebec's most accessible grant for AI adoption. Three components depending on where you are: feasibility studies ($20K–$50K), digital diagnostics ($10K–$20K), and digital implementation ($20K–$50K). Stream 1 is open through March 2027. Explicitly covers recommendation engines, predictive models, computer vision, AI-powered SaaS.

Quebec's AI-focused evolution of the former e-business tax credit. 30% of eligible salaries — 22% refundable, 8% non-refundable. Applies to fiscal years starting after December 31, 2025. If you have Quebec employees working on AI projects, this is money sitting in your tax return.

Track employee time on eligible AI work throughout the year. Claim on your Quebec corporate tax return. Works cleanest with a tax specialist who knows the program.

Quebec's research partnership fund. Up to $500K/year for collaborative AI projects. Dedicated PARTENAR-IA stream for AI development and commercialization. Requires partnering with a research center. If you're doing anything at the R&D end of AI, worth the process.

IRAP covers 80% of salaries as you go. SR&ED covers overhead and materials retrospectively. Example: $400K AI R&D project. IRAP covers $280K (salaries). SR&ED claims $120K (overhead + materials) and returns $42K at 35%. Total government support: $322K. Your co-investment: $78K. Note: IRAP funding is "government assistance" and reduces your SR&ED eligible base dollar-for-dollar — track carefully with an accountant.

ESSOR covers 50% of implementation costs. CDAEIA covers 30% of salaries on the same project. Different expense categories — they layer cleanly. Example: $100K implementation project + $160K in employee salaries. ESSOR: $50K. CDAEIA: $48K. Total government support: $98K on a $260K project.

Use IRAP for R&D phase (build it). Use ESSOR for the Quebec deployment phase (roll it out). Clean sequential logic, different expense types, no overlap.

CDAEIA claims 30% of qualifying AI staff wages. SR&ED claims the R&D overhead and remaining eligible costs on the same project. Different portions of the same work — both apply.

If you're using it as-is, no. If you're building custom AI on top of it — fine-tuning, developing novel processes, solving a technical problem that isn't guaranteed to work — yes. The key is engineering effort and documented uncertainty, not the software itself.

Only if you're building proprietary AI tools — a custom attribution model, a demand forecasting engine, something novel. Using existing tools to deliver client work doesn't qualify. The distinction: Are you doing R&D to build something, or using tools to deliver a service?

Almost everything: software licences, cloud costs, consultant fees, training. The distinction is between deductible (reduces taxable income) and SR&ED-eligible (generates a cash refund on top of deduction). Maximize SR&ED first — it's more valuable. Deduct the rest normally.

60 days if accepted, up to 180 days if audited (90 days with new pre-claim approval). In practice: expect 4–6 months. If you need money faster, IRAP or Quebec grants pay during the project.

Plugging in a ChatGPT API? No. Building a custom solution where GPT is one component of novel work with documented uncertainty? Possibly SR&ED or IRAP eligible. The bar is effort and uncertainty, not the technology stack.

Yes. Scale AI (when open) funds custom training programs. ESSOR covers training as part of implementation. IRAP can include training if it's project-specific. Standard training costs are deductible regardless.

IRAP is a grant — upfront, non-repayable, paid as you go, requires an application and NRC advisor. SR&ED is a tax credit — filed with your return, covers broader expenses, paid months later. Use both: IRAP funds the people doing the work, SR&ED refunds you for what you spent.

No, but first-timers usually benefit from one. A $2K–$5K advisor fee often uncovers $20K–$100K+ in eligible work you'd otherwise miss. Worth it once.

Yes — that's the whole stacking strategy. Watch cumulative caps (75% federal, 80% Quebec), don't double-claim the same expense, and make sure IRAP funding is disclosed on your SR&ED form.

CRA asks for documentation: project timelines, expense records, meeting notes, code history. Most audits end in a negotiated settlement — you keep 70–90% of what you claimed. Poor documentation is the main reason claims get reduced. Don't panic, do get professional help if it happens.

ESSOR covers 50% of consulting as part of implementation. SR&ED and IRAP cover contractor fees if they're doing the technical R&D work. Pure advisory consulting (telling you what to do) is deductible but rarely grant-eligible on its own.

Contact your regional NRC-IRAP advisor for a free preliminary assessment — no fee, no obligation, answer within a week. Ask yourself first: Is there genuine technical uncertainty? Commercial value? Can it be done in 12–24 months with a real budget? If yes to all three, it's worth the call.