How FedDev's AI adoption funding works

FedDev Ontario pays up to half the eligible cost of an AI project at a southern Ontario business, and the business pays it back without interest¹. The money comes from the Regional Artificial Intelligence Initiative, which Ottawa launched in October 2024 with $200M². An extra $500M over five years brings the initiative's federal funding to $700M, which seven regional development agencies hand out³.

What the AI adoption stream pays for

FedDev's adoption stream funds established businesses that build AI into their operations to raise productivity and compete better⁵. The project has to go further than buying commonly available AI tools⁵, so a batch of chatbot subscriptions won't qualify on its own. FedDev gives these examples of eligible work⁵:

• An AI readiness assessment
• Buying and integrating AI systems, such as predictive analytics or robotics
• Upgrading equipment and digital infrastructure, and re-engineering processes
• Improving data quality, governance and architecture so AI can use the data
• Bringing in AI expertise, and training staff where another government program doesn't already pay for it
• Cybersecurity, guidelines for responsible AI use, change management and AI literacy for employees

Eligible costs are new costs the project needs, tied directly to that work¹. Land, buildings and refinancing existing debt don't count, and FedDev won't reimburse the cost of preparing an application¹. The stream's description also mentions priority sectors without listing them⁵, so check FedDev's Application Guide for Businesses or ask the agency if your industry is in doubt⁴.

Who can apply for FedDev AI funding

A business has to meet all of these to apply to the adoption stream⁵:

• It's a for-profit business, located and operating in southern Ontario when it applies.
• It's incorporated and registered to do business in Canada or Ontario.
• Its financial statements show at least 3 years of operations.
• It has at least 5 full-time equivalent employees, and fewer than 500 overall.
• It owns the project's IP, or will, and has the rights to any other IP the project needs.
• It can show a commitment to responsible AI, including cybersecurity, human oversight and accountability.

Companies that build their own AI products apply to the commercialization and scale-up stream, which needs 1 year of operations and at least 1 full-time equivalent employee in southern Ontario, with the same cap of 500⁵. Businesses in Northern Ontario apply to FedNor, which runs its own version of the program³.

FedDev AI funding deadlines

FedDev opened its intake on October 13, 2026⁴. Apply by November 24, 2026 if your project and its eligible costs start before March 31, 2027⁴. Every other project has until January 19, 2027 at 4:59 p.m. Eastern Standard Time⁴, and approved projects must finish by March 31, 2031¹.

An application doesn't commit FedDev to fund the project, and each contribution depends on the money available¹, so it's worth applying well before the deadline.

How to apply

1. Read FedDev's Application Guide for Businesses from start to finish⁴.
2. Download and fill in two forms: the Application for Funding and the RAII Supplemental Form⁴.
3. Gather the mandatory attachments the guide lists⁴. For the adoption stream, your financial statements need to show at least 3 years of operations⁵.
4. Submit both forms with the attachments. FedDev emails you the date and time it received them⁴.
5. Expect a technical review. FedDev may ask the National Research Council's Industrial Research Assistance Program (NRC-IRAP) or another outside party to assess the project⁴.

FedDev takes one application per business at a time⁴, so plan a single project that covers the AI work you want funded now.

AI funding in the rest of Canada

Six other regional development agencies deliver the same initiative, and each sets its own dates and terms³. The cards below show them as each agency's page listed them on October 29, 2026.

SR&ED and your AI funding application

SR&ED gives tax credits for research and development in Canada, and it covers work that seeks new scientific or technical knowledge through a systematic investigation¹². Setting up an AI tool someone else built rarely produces new knowledge, while a custom model that runs into a real technical unknown might qualify.

For tax years that begin after December 15, 2024, the enhanced 35% credit covers up to $6M of eligible spending a year, up from $3M, and eligible Canadian public corporations can now claim it too¹³.

FedDev treats SR&ED as other government assistance and asks applicants to leave SR&ED-eligible costs out of their application where they can¹. Decide which costs go to which program before you fill in either form.

If you haven't picked a project yet, our two-week AI audit ranks the work worth changing by the hours and dollars each change would save, and we check program eligibility with you before you apply. FedDev Ontario also funds McCarthy's AI.