Government Funding for AI Projects in Canada: IRAP, SR&ED, FedDev Ontario and Ontario Programs (November 2026)

As of November 2026, the main government routes for Canadian businesses funding AI projects are: the National Research Council's Industrial Research Assistance Program (NRC IRAP), including its AI Assist program for SMEs developing generative AI and deep learning solutions; the Scientific Research and Experimental Development (SR&ED) tax incentives, which were expanded for tax years beginning after December 15, 2024; FedDev Ontario's Regional Artificial Intelligence Initiative (RAII) for businesses in southern Ontario, which is accepting applications; and Ontario's Digital Competence Centre for digital adoption planning. The Canada Digital Adoption Program (CDAP) has ended. Which program fits depends mainly on whether you are building new AI technology or adopting existing tools, and every program has its own eligibility rules, so confirm current details with the program before planning around funding.

Before you read: an important caveat

Dassjay Labs is an AI consultancy, not a funding or tax advisor. We do not guarantee eligibility for any program, and nothing here is tax, legal or financial advice. Programs open, close and change their rules. The information below was checked against official program pages in early November 2026. Always confirm current eligibility, intake dates and terms directly with the program, and for SR&ED, consider working with a qualified practitioner.

Builders and adopters: the distinction that matters most

Most funding conversations about AI go better once you are clear about which kind of project you have.

• Building or adapting AI technology. Developing a new model approach, a new product with AI at its core, or solving a technical problem where known methods do not work. Programs aimed at research, development and innovation, such as NRC IRAP and SR&ED, are the usual places to look.
• Adopting AI in your operations. Bringing existing AI tools or custom automations into your business to improve productivity, such as document intake, request triage or reporting. Research-focused programs often do not fit this kind of work. Adoption-focused programs, such as RAII's AI Adoption stream in southern Ontario, are more relevant.

Many real projects contain some of both. Be honest about the mix.

Quick reference (as of November 2026)

NRC IRAP

The National Research Council's Industrial Research Assistance Program offers advice, connections and funding to help Canadian businesses grow through innovation. According to the NRC, a business must be incorporated, for-profit and operating in Canada, employ up to 500 people (full-time equivalent), develop and commercialize innovative, technology-driven products or services, and be ready to create economic benefits in Canada. Meeting these minimums does not guarantee support. IRAP does not fund day-to-day operating costs or purely commercial activities.

Access starts with a phone call to the NRC, followed by a conversation with a client engagement advisor, who may refer you to an industrial technology advisor. The NRC notes that this relationship typically starts with advice and referrals before any funding is provided, so it is worth making contact well before you need money.

AI Assist

Within IRAP, the AI Assist program supports SMEs that are developing and adapting generative AI and deep learning solutions to incorporate into their core products and services, including research, product development, testing and validation. It is aimed at companies building AI into what they sell, not at businesses simply using off-the-shelf AI tools. The NRC's 2026 to 2027 departmental plan states that AI Assist will continue in that year. Existing IRAP clients are directed to ask their industrial technology advisor about it.

The NRC also notes that the government has announced plans to move IRAP into a new Crown corporation, the Canada Innovation Corporation, and that IRAP remains with the NRC until then. Check the NRC site for the latest.

SR&ED tax incentives

The SR&ED program, administered by the Canada Revenue Agency, provides tax incentives for research and development carried out in Canada, claimed with your income tax return as a deduction or an investment tax credit.

Recent changes

The CRA reports that legislation enacting changes to SR&ED (Bill C-15) received Royal Assent on March 26, 2026, with the changes applying to tax years beginning after December 15, 2024. As of November 2026, the CRA's investment tax credit policy states:

• The basic SR&ED investment tax credit rate is 15%.
• Canadian-controlled private corporations, and now eligible Canadian public corporations, may earn an enhanced rate of 35% on qualified expenditures up to an annual expenditure limit of $6 million, increased from $3 million.
• For Canadian-controlled private corporations, the limit is reduced as the previous year's taxable capital employed in Canada rises above $15 million, and is eliminated at $75 million.
• Capital expenditures made after December 15, 2024 are again eligible.

The CRA also launched an optional pre-claim approval process on April 1, 2026, which lets eligible corporations and partnerships with gross business income under $25 million, in good standing with the CRA, have planned work evaluated before starting it (or soon after it has begun). You still need to file a claim.

How AI work relates to SR&ED

SR&ED is defined as systematic investigation, by experiment or analysis, to achieve scientific or technological advancement where there is technological uncertainty: it is unknown whether a result can be achieved, or how, using available knowledge. The CRA's guidance is clear on what does not count on its own:

• Applying known methods or established practice to a new situation, where there is reasonable certainty of the outcome.
• Routine troubleshooting of software or processes.
• The size or complexity of a project by itself.
• Business or commercial uncertainty, such as whether customers will adopt the product.

In practice, configuring a commercial AI assistant or connecting a standard model to your systems in a well-understood way is unlikely to qualify. Work that tackles a genuine technical problem, such as getting reliable results on a document type where established methods fail, and that is carried out as a documented series of hypotheses and experiments, may. Only the CRA decides, so get qualified advice.

FedDev Ontario: Regional Artificial Intelligence Initiative

FedDev Ontario, the federal economic development agency for southern Ontario, runs the Regional Artificial Intelligence Initiative to help businesses and organizations adopt and integrate AI, help Canadian AI companies commercialize and scale, and strengthen the organizations that support them. As of November 2026, its program page states that applications are being accepted from October 13, 2026 to January 19, 2027, with an earlier application deadline for projects whose eligible costs start before March 31, 2027, so check the program page for the date that applies to you. Check the program page for current dates.

For businesses, FedDev Ontario lists two streams:

• AI Adoption. For established businesses adopting AI to improve productivity and resilience. Examples of eligible activities include AI readiness assessments, acquiring and integrating AI solutions, cybersecurity and training.
• AI Commercialization and Scale-Up. For businesses validating, commercializing and scaling Canadian-made AI products.

As of November 2026, FedDev Ontario describes the business funding as repayable, covering up to 50% of eligible costs, with contributions from $125K to $5M. Applicants must demonstrate a commitment to responsible AI, including cybersecurity, human oversight and accountability. RAII covers southern Ontario, including Waterloo Region; businesses elsewhere in Canada should check with their own regional development agency.

Ontario: Digital Competence Centre

The Ontario Centre of Innovation runs the Digital Competence Centre, supported by the Government of Ontario, to help small and medium-sized businesses with digital transformation. Its Digital Modernization and Adoption Plan stream is for Ontario-based, for-profit SMEs with between 1 and 499 employees that want to understand their digital needs, and runs first-come, first-served while funds last. The program page does not mention AI specifically, so ask OCI whether AI tools fit within a digital plan. When we checked, the Technology Demonstration Program was closed to applications and a separate retail grant was open to eligible direct-to-consumer retailers.

Programs that have ended

The Canada Digital Adoption Program is often still mentioned online. BDC states that new applications to its Boost Your Business Technology stream closed on February 19, 2024, and ISED's published records state that both streams concluded on March 31, 2025. Do not plan a project around it.

Waterloo Region support

Regional organizations sometimes run their own AI initiatives. Communitech's AI@Work program pairs non-tech Waterloo Region businesses with student teams from local post-secondary institutions to build and deploy AI solutions, with the students' wages shared between Communitech and the business. This is a regional program rather than government funding, and its page listed Winter 2027 applications as open when we checked.

How to prepare an AI project for funding conversations

1. Define the project tightly. One objective, a budget and a timeline.
2. Separate research from adoption. Identify which parts involve genuine technical uncertainty and which are integration or rollout.
3. Document technical uncertainty early. Write down what you are trying to achieve, why known methods may not work, and what you plan to test.
4. Keep contemporaneous records. Experiments, evaluation results, design notes, code history and time spent.
5. Talk to the program first. Ask about eligibility, timing and whether costs incurred before approval can count.

How Dassjay Labs can help

Dassjay Labs is an AI consultancy and product studio in Kitchener, Ontario. We do not prepare funding applications or tax claims, and we cannot tell you whether you qualify. What we can do is help you scope an AI project clearly, separate the technical work from the rollout, and document the technical uncertainty, experiments and evaluation results as the work happens, so that you and your advisors have good material to work from. See our 90-day AI automation roadmap, our AI strategy and business process automation services, or get in touch.

Official sources

• NRC: Support for technology innovation (IRAP)
• NRC IRAP: Financial support for technology innovation
• NRC IRAP: Support for SMEs innovating with AI (AI Assist)
• CRA: SR&ED tax incentives
• CRA: SR&ED news and updates
• FedDev Ontario: Regional Artificial Intelligence Initiative
• Ontario Centre of Innovation: Digital Competence Centre