Note: CDAP (listed below) closed in February 2024. BDC's Data to AI program is the successor. All other programs in this guide remain active.
The Canadian government offers some of the most generous funding programs in the world for businesses adopting or developing artificial intelligence. From non-repayable grants to refundable tax credits, there are multiple programs designed to reduce the financial risk of investing in AI — whether you are a small retailer adding your first chatbot or a tech company training custom machine learning models.
The challenge is that these programs are spread across different federal agencies, each with its own eligibility criteria, application process, and funding structure. This guide provides a clear overview of the five most important programs every Canadian business should know about.
1. Canada Digital Adoption Program (CDAP)
| Administered by | Innovation, Science and Economic Development Canada (ISED) |
| Funding | Up to $15,000 grant + $100,000 interest-free BDC loan |
| Best for | SMBs adopting digital tools and AI for the first time |
| Eligibility | 1–499 employees, $500K–$100M revenue, Canadian-owned, incorporated |
CDAP is the most accessible entry point for non-tech businesses looking to digitize. The program funds a professional digital adoption plan — a comprehensive roadmap for adopting AI, cloud, e-commerce, and other digital tools. The optional BDC loan then helps fund the implementation.
Program closed: CDAP stopped accepting new applications on February 19, 2024 and is permanently closed. BDC's Data to AI program is the successor, offering expert guidance and preferential-rate financing for AI adoption. Visit bdc.ca for details.
Read our complete CDAP guide →
2. Industrial Research Assistance Program (IRAP)
| Administered by | National Research Council of Canada (NRC) |
| Funding | Varies; typically $50K–$500K+ per project (non-repayable) |
| Best for | Tech companies doing R&D and innovation |
| Eligibility | 500 or fewer employees, incorporated in Canada, pursuing innovation |
IRAP is Canada's premier innovation assistance program. It provides non-repayable contributions to co-fund R&D projects, plus access to a dedicated Industrial Technology Advisor (ITA) who provides ongoing technical and business guidance. IRAP is ideal for companies building AI products or developing novel technology solutions.
IRAP accepts inquiries year-round — there are no intake windows or application deadlines.
Read our complete IRAP guide →
3. SR&ED Tax Credits
| Administered by | Canada Revenue Agency (CRA) |
| Funding | Up to 35% refundable federal ITC for CCPCs + provincial credits |
| Best for | Companies with developers doing genuine R&D work |
| Eligibility | Any Canadian corporation performing qualifying R&D; enhanced rates for CCPCs |
SR&ED is Canada's largest R&D incentive, distributing over $3 billion annually. Unlike IRAP (and the now-closed CDAP), SR&ED is a tax credit — you claim it on your corporate tax return after the fiscal year ends. For small Canadian-controlled private corporations (CCPCs), the federal credit alone can return 35 cents on every dollar of qualifying R&D expenditure, and most provinces add an additional provincial credit on top.
AI work qualifies when it involves genuine technological uncertainty — training custom models, developing novel algorithms, or building systems that push beyond what existing tools can handle. Routine integration of existing AI APIs does not qualify.
Does your AI work qualify? → | How to file your claim →
4. Ontario Interactive Digital Media Tax Credit (OIDMTC)
| Administered by | Ontario Creates |
| Funding | 40% refundable tax credit on qualifying labour expenditures |
| Best for | Ontario-based companies developing interactive digital products |
| Eligibility | Ontario corporation developing qualifying interactive digital media products |
The OIDMTC is one of the most generous provincial tax credits in Canada, offering a 40% refundable tax credit on qualifying labour and marketing expenditures for interactive digital media products developed in Ontario. This includes AI-powered SaaS platforms, interactive applications, educational software, and digital tools with interactive user interfaces.
The OIDMTC can be stacked with SR&ED — you claim SR&ED on the R&D components and OIDMTC on the broader product development labour. This combination is particularly powerful for Ontario-based AI product companies.
Other provinces offer similar credits. Quebec has the CDAE (Credit for the Development of E-Business) and British Columbia has the IDMTC. Check your provincial government's website for details.
5. CanExport SMEs
| Administered by | Global Affairs Canada / Trade Commissioner Service |
| Funding | Up to $50,000 per project (non-repayable) |
| Best for | AI companies looking to expand into international markets |
| Eligibility | Canadian SMEs with fewer than 500 employees and revenue under $100M |
While not AI-specific, CanExport is highly relevant for Canadian AI companies looking to sell internationally. The program provides non-repayable contributions of up to $50,000 to help cover the costs of developing new export markets — including trade shows, market research, business travel, legal and patent costs in target markets, and marketing adaptation.
For AI companies, this can fund attending international AI conferences, adapting your product for foreign markets, or establishing sales operations in the US, UK, or EU. CanExport accepts applications on a continuous basis.
CanExport eligibility and funding amounts are set by Global Affairs Canada and may change. Visit the official CanExport page for the latest information.
Can You Stack Multiple Programs?
Yes. Most of these programs can be combined, provided you do not use multiple programs to fund the same expense. Here is a quick reference for common stacking combinations:
| Combination | How It Works |
|---|---|
| IRAP + SR&ED | Claim SR&ED on the portion of R&D salary NOT covered by IRAP |
| CDAP + IRAP | CDAP funds the digital plan; IRAP funds R&D identified in the plan |
| SR&ED + OIDMTC | SR&ED on R&D work; OIDMTC on broader product development labour (Ontario) |
| Any program + CanExport | CanExport covers international market development — no overlap with R&D or domestic adoption programs |
Which Program Should You Start With?
The right starting point depends on your business type and where you are in your AI journey:
- •“We want to adopt AI but do not know where to start” → BDC Data to AI (successor to CDAP, which is now closed)
- •“We are building new AI technology” → IRAP + SR&ED
- •“We already have developers doing R&D” → SR&ED (you may already qualify and not know it)
- •“We are an Ontario AI product company” → OIDMTC + SR&ED
- •“We want to sell our AI product internationally” → CanExport
Not sure which programs fit your business? Get matched automatically.
Our free eligibility assessment screens your business against all five of these programs — plus additional provincial programs — in about 10 minutes. You will receive a clear picture of which programs align with your business, estimated funding ranges, and recommended next steps.
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