What Expenses Are Eligible Under Most Canadian Government Grants

What Expenses Are Eligible Under Most Canadian Government Grants

You’ve found a grant that looks promising. Now comes the hard part: figuring out what you can actually spend the money on. Most Canadian government grants follow similar rules about eligible expenses, but the details matter. Understanding these categories upfront can help you avoid rejected claims or clawbacks later.

Across federal, provincial, and municipal programs, eligible costs are usually tied directly to the project you applied for. These expenses must be reasonable, documented, and incurred during the approved project period.

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Core Expense Categories Most Grants Will Cover

While every program has its own rules, most Canadian government grants allow expenses that fall into the categories below. Always confirm with the program guide or funding agreement before spending.

1. Labour and Wages

This is one of the most commonly approved expense types.

Typically eligible:

• Salaries or hourly wages for employees working on the funded project
• Employer-paid payroll costs like CPP and EI
• Contract labour directly tied to the project scope

Common limits:

• Owners’ salaries are often capped or excluded
• Bonuses and commissions are usually not eligible
• You must track time spent on the project

These costs must be clearly connected to the funded activities and supported by payroll records or contracts.

2. Professional and Third-Party Services

Many grants allow you to hire outside expertise when it’s essential to the project.

Often eligible:

• Consultants and advisors
• Engineers, designers, or IT specialists
• Marketing or commercialization support linked to the project

What funders look for:

• Clear scope of work
• Market-rate pricing
• No conflicts of interest

Personal service providers or related parties may be restricted or require disclosure.

3. Equipment and Technology

Grants often support equipment purchases when they are necessary for project delivery.

Commonly eligible:

• Specialized equipment
• Software licences and subscriptions
• Technology tools used during the project

Common restrictions:

• Equipment must be used primarily for the funded project
• General office equipment (like desks or printers) is often excluded
• Some programs only allow depreciation, not full purchase cost

4. Training and Skills Development

Workforce development is a priority across Canada, so training costs are frequently eligible.

Typically covered:

• Third-party training fees
• Course tuition for new skills
• Certification costs related to the project

Usually not covered:

• Internal training time
• Mandatory onboarding or compliance training
• Travel costs unless specifically stated

Some programs require proof that training is new and incremental.

5. Materials and Supplies

If your project involves production, research, or development, materials may be eligible.

Examples include:

• Raw materials used in prototypes
• Research supplies
• Testing materials

These costs must be consumed during the project and not resold as regular inventory.

6. Travel (Limited and Controlled)

Travel is eligible under some grants, but it’s closely scrutinized.

Often allowed:

• Economy airfare
• Standard accommodation
• Mileage at prescribed rates

Often excluded:

• Meals and per diems
• Conference attendance
• International travel

Pre-approval is commonly required before incurring travel costs.

7. Overhead and Administrative Costs

Some programs allow a portion of indirect costs.

May include:

• Rent or utilities (pro-rated)
• Internet and phone
• Administrative support

Many grants cap overhead at a fixed percentage or exclude it entirely.

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A Quick Reality Check

Just because an expense is “eligible” doesn’t mean it’s automatically reimbursed. You usually must:

• Incur the cost after approval
• Pay it upfront
• Submit receipts and reports on time

Tools like GrantHub’s eligibility matcher can help you filter programs by province, industry, and expense type in seconds, which helps you identify eligible expenses early on.

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Common Mistakes to Avoid

1. Spending before approval
   Costs incurred before the official project start date are almost always ineligible.

2. Assuming operating costs are covered
   Most grants fund projects, not day-to-day business expenses like rent or utilities.

3. Poor documentation
   Missing invoices, unclear receipts, or no proof of payment can lead to denied claims.

4. Changing the project without permission
   Spending outside the approved scope, even if reasonable, can make expenses ineligible.

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Frequently Asked Questions

Q: Are owner salaries eligible under most Canadian grants?
Sometimes, but often with limits. Many programs cap owner compensation or exclude it entirely unless the owner is working directly on the project and time is tracked.

Q: Can I use grant money for marketing?
Yes, if the marketing is directly tied to the funded project, such as commercialization or market entry. General advertising is often excluded.

Q: Do I need to pay expenses upfront?
In most cases, yes. Canadian grants usually reimburse costs after you submit proof of payment and progress reports.

Q: Are HST and GST eligible expenses?
Often no, if your business can recover the tax through input tax credits. Programs usually require you to deduct recoverable taxes.

Q: What happens if an expense is ruled ineligible later?
You may have to repay that portion of the funding. In serious cases, future funding eligibility can be affected.

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Next Steps

Understanding eligible expenses is only half the battle. The real challenge is matching your project to programs that actually fund those costs. GrantHub tracks hundreds of active grant programs across Canada—checking which ones align with your expense needs is a smart next move.

See also:

• How to stack grants and loans without violating funding rules
• How Long Do Canadian Grant Programs Take to Pay Out Funds?
• What expenses do arts, culture, and media grants cover?