Ontario Manufacturing Grants 2026: SR&ED, IRAP, and Industrial Funding Programs

Published March 2, 2026 · Updated for 2026 fiscal year

Ontario's manufacturing sector — from automotive parts and steel fabrication to food processing and precision aerospace — has access to a deep stack of federal and provincial funding programs in 2026. Whether you run a small machine shop with 12 employees or a mid-sized contract manufacturer with 200 workers, there are programs designed specifically for your stage of growth. This guide breaks down the most important grants, tax credits, and industrial funding programs available to Ontario manufacturers right now.

Scientific Research and Experimental Development (SR&ED)

The Scientific Research and Experimental Development (SR&ED) tax incentive program is the single largest source of federal support for Canadian manufacturers who invest in research, development, or process innovation. It is not a grant — it is a refundable tax credit, which means eligible businesses can receive cash back even if they owe no corporate tax in a given year.

SR&ED Credit Rates for 2026

• Canadian-Controlled Private Corporations (CCPCs): 35% refundable investment tax credit on the first $3 million of qualifying SR&ED expenditures per year
• Other corporations and individuals: 15% non-refundable investment tax credit
• Eligible expenditures: Wages for R&D staff, materials consumed during experiments, contract payments to arm's-length parties, and overhead calculated using the proxy method

What Qualifies as SR&ED Work?

To qualify, your work must attempt to achieve technological advancement and involve technological uncertainty — meaning the solution could not be found by simply applying existing knowledge. For manufacturers, qualifying projects often include:

• Developing new or improved production processes to reduce defects or cycle times
• Experimenting with new material formulations or alloys
• Building custom automation or tooling where commercial solutions don't exist
• Improving energy efficiency through novel process engineering
• Developing proprietary software for machine control or quality inspection

Work that does not qualify includes routine quality control, market research, style changes, and incremental improvements that don't involve technological uncertainty.

How to Claim SR&ED

SR&ED claims are filed with the Canada Revenue Agency (CRA) using Form T661 (SR&ED Expenditures Claim) alongside your corporate income tax return. You have 18 months from your fiscal year-end to file. Many manufacturers work with SR&ED consultants who earn 15–25% of the credit on a contingency basis — a reasonable trade-off for a first claim, though experienced claimants often prepare submissions in-house.

Industrial Research Assistance Program (IRAP)

The National Research Council's Industrial Research Assistance Program (NRC-IRAP) is Canada's premier federal grant for SME manufacturers investing in technology-driven innovation. Unlike SR&ED, IRAP is a direct non-repayable contribution — cash in, not a tax credit you wait to receive.

• Funding amount: Typically $50,000 to $500,000+ for innovation projects, with some industrial-scale projects receiving more through IRAP's collaborative streams
• Eligible costs: Wages of R&D staff (up to 80% covered), contractor costs, and some materials directly consumed in the project
• Who qualifies: For-profit businesses incorporated in Canada with fewer than 500 employees and genuine technology development goals
• Application: Contact your regional NRC-IRAP Industrial Technology Advisor (ITA) — there is no open call for proposals. The ITA visits your facility, assesses your project, and guides the application

Ontario has ITAs located in Hamilton, Toronto, Kitchener-Waterloo, Ottawa, London, and most major industrial centres. Manufacturers who are awarded IRAP often describe the ITA relationship as highly valuable beyond the funding itself — the advisor connects you with testing labs, universities, and potential partners.

Ontario Made Manufacturing Investment Tax Credit

The Ontario Made Manufacturing Investment Tax Credit was introduced to directly support investment in manufacturing assets within the province. For eligible manufacturing and processing corporations:

• Credit rate: 10% refundable corporate income tax credit
• Eligible expenditures: Capital investments in Ontario for use in manufacturing or processing — including new machinery, equipment, and certain building improvements directly tied to production
• Who qualifies: Canadian corporations with a permanent establishment in Ontario engaged in manufacturing or processing of goods for sale

This credit is claimed on your Ontario corporate tax return (Schedule 556). It stacks with federal credits and can be used alongside SR&ED, making it particularly valuable for manufacturers who are also investing in R&D-driven capital equipment.

Canadian Manufacturers and Exporters (CME) Programs

Canadian Manufacturers and Exporters (CME) is the largest industry association representing Ontario manufacturers, and it administers several funded programs that are often overlooked:

• SMART Program (Subsidized Management Accelerator for Rapid Transformation): CME-delivered training and consulting subsidized through government funding — helps manufacturers implement lean manufacturing, ISO certification, and workforce development at reduced cost
• Export Market Development Programs: CME facilitates access to trade missions, export readiness assessments, and connections to CanExport SMEs funding for manufacturers entering new markets
• Workforce Development: CME partners with colleges and WSIB-funded training programs to reduce the cost of upskilling production workers

FedDev Ontario — Southern Ontario Growth Fund

FedDev Ontario is the federal regional development agency serving southern Ontario, including the manufacturing heartland of Hamilton, Cambridge, Kitchener-Waterloo, Guelph, Brantford, and Niagara. Its programs include:

• Business Scale-Up and Productivity Program: Non-repayable contributions of $500,000 to $10 million for high-growth manufacturers investing in productivity improvements, automation, and market expansion
• Enabling Inclusive Growth Stream: Targeted support for manufacturers owned by underrepresented groups (women, Indigenous, persons with disabilities)
• Collaborating for a Stronger Ontario: Funding for industry-research partnerships, often involving a post-secondary institution

FedDev Ontario programs are competitive and require detailed project plans, job-creation commitments, and strong financial documentation. Average review timelines are 3–6 months from application to funding decision.

Ontario Centre for Innovation (OCI)

The Ontario Centre for Innovation (OCI) funds industry-academic collaboration and commercialization projects. For manufacturers, the most relevant streams are:

• Industry-Academic Collaboration Fund: Matches manufacturers with university or college research capacity to solve production challenges
• Voucher for Innovation and Productivity (VIP): Up to $75,000 in matching contributions for SME manufacturers to access specialized equipment, testing, or expertise at Ontario post-secondary institutions

Stacking Strategy: Getting the Most from Multiple Programs

The real advantage for Ontario manufacturers is that most of these programs can be stacked — you can claim SR&ED and IRAP on the same project (with careful allocation so the same dollar isn't double-claimed), apply for the Ontario Made Manufacturing Investment Tax Credit on capital purchases, and separately access FedDev Ontario for a capacity expansion project. A mid-sized manufacturer investing $2 million in a new production line with R&D components could reasonably access $400,000–$800,000 in combined credits and grants across multiple programs.

The key is documentation. Start your project records from day one — lab notebooks, time-tracking logs, material usage records, and email chains that demonstrate technological uncertainty. The CRA and NRC-IRAP both rely heavily on contemporaneous documentation when reviewing claims.