Why you should apply before you spend

Most grants, wage subsidies and rebates in Canada will not pay for anything you bought, signed or started before the program approved you. These are called retroactive costs, and they are one of the most common reasons people miss out on funding they would otherwise have received. The safe order is simple: apply, wait for approval in writing, then spend.

Why won’t programs pay for costs you already had?

Funding programs exist to make something happen that might not have happened otherwise. If you already bought the equipment or hired the person, the program has not changed anything, so most won’t pay for it. These are retroactive costs, and most program guides say plainly that they are not eligible costs.

There is also a practical reason: a funder needs to check that a cost fits the program before the money is committed. Once it is spent, there is nothing left to check.

When does “approved” actually start?

This is where people get caught. Being told “your application looks good” is not approval. Depending on the program, the date your costs can start counting may be:

• the date on a signed contribution agreement;
• the date of an approval letter or email;
• for some programs, the date your complete application was received, with any spending before approval at your own risk.

Each program sets its own rule, and the agreement usually states the start date for eligible costs. Check the program page and your agreement, and when in doubt, ask the funder in writing before you spend.

What counts as spending?

More than you might think. Many programs treat a cost as started when you commit to it, not only when you pay it. Watch out for:

• signing a contract or a purchase order;
• paying a deposit;
• ordering equipment, even if it hasn’t arrived;
• starting construction or installation;
• a new employee’s first day of work.

Getting quotes, talking to suppliers and planning are usually fine, and often required. Just don’t sign or pay until you are approved.

What does this mean when you hire?

A wage subsidy usually has to approve the job before the person starts. If they start first, that job may not qualify at all. Programs such as Canada Summer Jobs and the Student Work Placement Program have their own rules about timing, so read the program page before you make an offer. Our post on hiring a student with a wage subsidy and the wage subsidies and hiring programs guide walk through the order of steps. You can also browse hiring funding.

What does this mean for energy upgrades?

Home and business energy rebates often need steps before any work begins: pre-approval, an energy assessment before the upgrade, or an approved contractor. Programs such as CleanBC Better Homes and the Home Renovation Savings Program each set their own steps, and skipping one can mean no rebate. Read home energy rebates: what to do before you upgrade and the home energy rebates guide, or see energy funding.

Are tax credits different?

Yes. A tax credit is claimed on your tax return for costs you already had, so there is nothing to apply for in advance. The SR&ED tax incentive works this way. But the same lesson applies in another form: keep records as you go. Trying to rebuild them a year later is much harder. Our post on SR&ED and IRAP explains how a tax credit and an apply-first program can fit together.

How do you plan so you don’t lose out?

1. Find the funding first. Before you plan a purchase, a hire or a renovation, see what might apply with the eligibility check.
2. Read the timing rules. On each program page, look for when costs can start and what must happen before you begin.
3. Build waiting time into your plan. Decisions can take a while. If you need to move fast, a program with continuous intake may suit you better.
4. Apply with quotes, not invoices. Quotes show you have planned; invoices show you have already spent.
5. Get approval in writing. Keep the letter or the signed agreement.
6. Then spend, and keep every receipt. You will need them for your claims. See getting paid: claims and reports.

If a deadline is coming up, check programs closing soon so you have time to apply properly.

Frequently asked questions

Can I get a grant for something I already bought?

Usually not. Most programs don’t cover costs from before approval. A few allow some costs from the date they received your application; the program page and your agreement say which applies.

Does a deposit count as spending?

Often, yes. Many programs treat a signed contract or a deposit as the start of a cost, even if most of the bill is paid later. Check the program’s rules before you commit to anything.

What if the program takes a long time to decide?

Plan for it. If you start anyway, you take the risk that those costs won’t be covered, or that the whole project becomes ineligible. Ask the funder whether early costs can ever count before you decide.

Do I need approval before claiming a tax credit?

No. A tax credit is claimed after you have the costs, on your tax return. What you do need is good records kept from the start.