What IRAP AI Assist Can Fund: Eligible Costs, Amounts, and Claiming
The Industrial Research Assistance Program (IRAP) – AI Assist supports organizations that deliver advisory and support services to Canadian SMEs on AI adoption. As of December 1, 2025, this federal initiative focuses on generative AI (GenAI), deep neural networks (DNN) and deep learning (DL) to help SMEs assess, frame, and plan AI integration. This guide explains what IRAP AI Assist can fund, the funding amounts and rates, eligible and ineligible costs, stacking rules, and how reimbursements work so you can plan a compliant project budget.
Program Funding Overview
IRAP AI Assist is administered by the National Research Council of Canada (NRC IRAP). The current call funds not-for-profit organizations and post-secondary institutions that will provide one-on-one “SME engagements” to companies referred by NRC IRAP Industrial Technology Advisors (ITAs).
Key points:
Financial assistance is provided as non-repayable contributions to funded organizations.
The initiative aims to deliver AI knowledge, use-case framing, and dataset quality reviews to SMEs nationwide.
Each SME engagement includes up to 20 hours of service delivered within a maximum of four months, with a standard $500 flat fee paid by the SME to the funded organization.
Costs are reimbursed to the funded organization based on eligible expenditures incurred during the agreement period.
This article focuses on the funding coverage for the organizations that apply and deliver services; SMEs receive services via referral rather than applying for contribution funding themselves.
Funding Amounts & Rates
IRAP AI Assist uses a contribution model with clear ceilings and cost coverage rules.
Total anticipated national budget: $10.5 million through March 31, 2029.
Typical project size: from $750,000 up to $10.5 million (allocated across federal fiscal years).
Funding rate: up to 100% of total eligible project costs, except the $500 per SME engagement fee paid by SMEs.
Disbursement: reimbursement of eligible costs as per the signed contribution agreement.
Important parameters:
The $500 SME fee must be built into your costing model and is not covered by NRC IRAP funding.
Costs must be incurred within the project period; pre-agreement (retroactive) costs are not reimbursable.
Funding may be shared among multiple organizations to ensure national coverage across provinces and territories (Ontario, Quebec, British Columbia, Alberta, Atlantic Canada, the Territories, and others).
Eligible Expenses
Only costs listed as eligible are reimbursable. Expenses must be reasonable, necessary, clearly tied to the approved work plan, and supported by documentation. Under IRAP AI Assist, eligible costs include:
Salary costs
Wages for employees directly delivering SME engagements and project management related to the funded work.
Time for senior, intermediate, and junior technical experts, project managers, administrative support, and other roles identified in the proposal.
Overhead costs
Up to 30% of salary costs. This is a capped allowance to cover indirect costs associated with delivering engagements.
Professional service rates
Fees charged by the funded organization for advisory and technical services within the approved scope (e.g., AI framing, data governance guidance, dataset quality review).
Contractor fees
Fees for Canadian contractors (organizations or individuals) engaged to deliver portions of the work. Foreign contractors or work performed outside Canada are not permitted.
Operating expenses
Operating costs that are reasonable and necessary to deliver the approved services. These must be clearly justified and directly attributable to the project.
Non-recoverable taxes
Any portion of HST/GST/PST that is not claimable by the applicant or its contractors is eligible.
Clarifications and good practices:
Resource categories and hourly rates
Proposals must specify hourly rates by role (e.g., senior technical expert, intermediate technical expert, junior technical expert, project manager, accountant, administrative support). Rates are in CAD and exclude taxes.
Canadian delivery requirement
All funded work must be performed in Canada by Canadian-based staff or contractors.
Tying costs to SME engagements
The cost model should clearly show the per-engagement cost derived from hourly rates multiplied by estimated hours per role, plus allowable overhead.
Ineligible Expenses
The following cannot be covered by IRAP AI Assist funding. Build your budget to exclude these items or fund them from non-IRAP sources (for example, from the SME’s $500 fee, philanthropic sources, or the organization’s own funds):
Travel or living expenses
Purchase of land
Leasehold interest
Property taxes
Patenting costs
Licensing costs
Any portion of HST/GST/PST or other taxes that is claimable by the applicant or its contractors
Any costs not explicitly listed as eligible
Notes:
Software licensing is ineligible. If your operating costs include tools, ensure they are not categorized as licensing. When in doubt, treat software licenses and subscriptions as ineligible.
If in-person meetings require travel, those costs are not claimable. Consider virtual delivery or cover travel from non-IRAP sources.
Expense Documentation Requirements
IRAP AI Assist reimburses based on documented, eligible expenditures. Expect to provide:
Payroll and labour records
Timesheets per employee with hours by task/SME engagement, payroll registers, T4/T4A support where applicable, and proof of payment.
Contractor documentation
Signed agreements, statements of work, Canadian address confirmation, detailed invoices, deliverables evidence, and proof of payment. NRC IRAP may vet contractor quotes for Canadian content, expertise, and reasonableness.
Professional service rates
Rate cards and internal billing records showing services rendered and alignment with approved roles and rates.
Operating expenses
Invoices, receipts, usage logs tying the expense to SME engagements or project management, and proof of payment.
Taxes
Calculations showing the non-recoverable portion of HST/GST/PST included in claims.
Claim forms and reports
Monthly claims with itemized cost summaries, status updates, and post-service assessments for each completed SME engagement; a final report at project close.
Records must be retained and made available for verification or audit as specified in the contribution agreement.
Examples of Funded Projects
The initiative is national and sector-agnostic, enabling organizations to serve SMEs in manufacturing, technology, agriculture, construction, logistics, clean tech, and more across the Montreal region, Greater Toronto Area, Lower Mainland, Calgary–Edmonton Corridor, Atlantic Canada, and the Territories.
Here are realistic scenarios:
Provincial AI readiness program (Ontario and Quebec)
Scope: 400 SME engagements over two years focused on AI use-case framing and dataset quality reviews delivered in English and French.
Budget: Salaries for senior and intermediate AI advisors, project management, admin support; overhead at ≤30% of salary; operating expenses directly tied to engagements; Canadian contractor support for surge periods.
Non-claimable: Staff travel for occasional site visits; software licenses; patenting or licensing.
SME contribution: $500 per engagement collected by the organization.
Sector-focused AI advisory (advanced manufacturing in Alberta and Saskatchewan)
Scope: 120 SME engagements emphasizing production data readiness, ethics, privacy and security, and preliminary cost modelling for GenAI copilots.
Budget: Technical expert time, admin, overhead, Canadian contractors for specialized data governance reviews; non-recoverable taxes.
Non-claimable: Licensing for MLOps or analytics platforms; travel.
Pan-Canadian consortium (universities and NFPs) for bilingual delivery
Scope: 1,000 SME engagements through March 31, 2029, covering all provinces and territories. Strong emphasis on underserved regions and French-language support.
Budget: Multi-site staffing, centralized project management, standardized engagement playbooks, and periodic quality audits; overhead capped at 30% of salary.
These examples illustrate how to structure labour-driven budgets to deliver up to 20 hours per engagement within four months, meeting service standards and documentation requirements.
Funding Disbursement & Claiming Process
IRAP AI Assist disburses funds via reimbursement for eligible costs:
Contribution agreement
Funding terms, eligible cost categories, reporting cadence, research security attestation, and service standards are defined in the agreement.
Monthly claims
Submit monthly claims with proof of costs incurred and paid, including payroll evidence, contractor invoices, and operating expense documentation. Include a status report summarizing activities.
Engagement-level reporting
Provide a completed post-service assessment for each SME engagement describing services delivered and outcomes.
Final report
At project end, submit a final report summarizing objectives achieved, outcomes, and lessons learned.
Timing
Costs incurred before the agreement start date are not reimbursable. Claims are processed following submission and verification; plan cash flow accordingly.
Stacking Rules
IRAP AI Assist permits stacking with other government programs, subject to strict limits and double-dipping prohibitions:
Total government assistance (federal, provincial/territorial, municipal) must not exceed 100% of total eligible project costs.
No single expense line can be charged to two programs. Maintain clear allocation and documentation.
Disclose all other public funding requested or received for the project and, where applicable, for partners.
Practical allocation tips:
If combining with provincial innovation funds, assign distinct cost lines or time blocks to each program.
Track time and expenses by engagement and funding source to ensure clean audits.
Regional Coverage and Language Delivery
Because funding is distributed to ensure national access:
Specify regions of delivery in your proposal (e.g., Quebec, Ontario, British Columbia, Atlantic Canada, the Territories).
Specify language capacity (English and/or French). Bilingual delivery is encouraged to reach SMEs across Ottawa–Gatineau, Montreal region, Quebec City, and beyond.
Regional planning affects staffing plans, contractor arrangements, and your per-engagement cost model.
Real-World Budgeting Tips
Build from the engagement
Start with the 20-hour cap per engagement. Estimate typical hour splits: discovery, technical analysis, dataset review, recommendations, and reporting.
Right-size the team mix
Use senior experts for complex scoping and quality assurance; delegate routine tasks to intermediate/junior staff to control unit costs.
Cap overhead at 30% of salary
Model overhead carefully to stay within the ceiling while covering indirect costs.
Avoid ineligible categories
Exclude software licensing, travel, and IP costs from IRAP claims. If essential, fund them from organizational sources or the SME fee.
Plan for documentation
Implement time-tracking and standardized engagement templates to speed up monthly claims and post-service assessments.
Cash flow
Since disbursement is reimbursement-based, ensure working capital can bridge between monthly claim submissions and payments.
Security and compliance
Confirm that staff and contractors are Canadian-based and not affiliated with organizations on the Named Research Organization list. Prepare to sign the NRC Research Security Requirements Attestation.
Frequently Asked Questions
What is the maximum funding amount for IRAP AI Assist?
Projects typically range from $750,000 up to $10.5 million. The national envelope is $10.5 million through March 31, 2029.
What percentage of costs does IRAP AI Assist cover?
Up to 100% of eligible project costs, excluding the $500 fee per SME engagement, which is paid by the SME to the organization.
Are software licences or cloud subscriptions eligible?
Licensing costs are ineligible. Treat software licences and subscriptions as non-claimable unless instructed otherwise in your agreement.
Can contractor fees be claimed?
Yes, if contractors are Canadian-based and the work is performed in Canada. Foreign contractors or work performed outside Canada are not permitted.
Are travel costs covered?
No. Travel and living expenses are ineligible and should be funded from non-IRAP sources.
Can we claim overhead?
Yes, overhead is eligible up to 30% of salary costs.
When can we start incurring costs?
Only costs incurred during the project period defined in the signed contribution agreement are reimbursable.
Can we combine IRAP AI Assist with provincial programs?
Yes, but total government assistance cannot exceed 100% of eligible costs, and no single cost can be claimed twice.
Conclusion
IRAP AI Assist is designed as a labour-driven, advisory-focused contribution program. It funds salaries, contractor fees (Canadian only), professional service rates, operating expenses tied to delivery, capped overhead, and non-recoverable taxes—while excluding travel, licensing, land, leaseholds, property taxes, and IP costs. By structuring your per-engagement cost model carefully, documenting labour and expenses rigorously, and respecting stacking and security rules, you can deliver high-impact AI support to SMEs nationwide under a compliant, fundable budget. For next steps, align your budget to the eligible-cost framework and prepare your role-based rate cards, documentation systems, and regional/language delivery plan.
