SR&ED for the Materials Science & Biomaterials Industry: R&D Tax Credits and Incentives
Can Your Materials Science & Biomaterials Projects Qualify for SR&ED?
Canada's materials science and biomaterials industry continues to advance through developments in advanced polymers, composites, nanomaterials, biomedical materials, sustainable materials and innovative manufacturing technologies. Materials manufacturers, chemical companies, biotechnology firms and research-driven businesses regularly encounter complex scientific and technological challenges as they work to improve material strength, durability, stability, functionality and performance.
Canada's Scientific Research and Experimental Development (SR&ED) tax incentive program provides tax incentives for eligible research and development activities undertaken to achieve scientific or technological advancements. Materials science and biomaterials businesses developing new materials, investigating chemical or biological interactions, experimenting with manufacturing processes or overcoming unresolved material performance challenges may qualify for SR&ED tax credits when their work meets the program's eligibility requirements.
What Type of Activities and Technological Challenges May Qualify?
- Advanced material development: Experimenting with new polymers, composites, alloys, ceramics or other materials to overcome challenges involving strength, durability, flexibility, thermal stability or performance.
- Biomaterials and biocompatibility research: Investigating new materials, coatings or surface treatments to address unresolved challenges involving biological compatibility, degradation, material stability or interactions with biological systems.
- Polymer and composite formulation: Developing or modifying material formulations to overcome technological uncertainties involving chemical compatibility, mechanical properties, processing behaviour or long-term stability.
- Nanotechnology and nanomaterials: Conducting experimental research involving nanoparticles, nanocomposites, thin films or engineered surfaces to improve material functionality, conductivity, strength or other performance characteristics.
- Surface coatings and material treatments: Experimenting with new coatings, adhesives, surface modifications or protective treatments to address challenges involving corrosion resistance, wear, adhesion or chemical stability.
- Material strength and durability improvements: Investigating material fatigue, fracture behaviour, deformation, dimensional stability or performance under demanding operating conditions.
- Thermal and chemical stability: Developing new materials or formulations to overcome challenges involving temperature resistance, thermal expansion, chemical degradation or environmental exposure.
- Sustainable and biodegradable materials: Experimenting with bio-based polymers, recyclable composites or biodegradable materials to address unresolved challenges involving performance, decomposition, processing or material stability.
- Advanced material manufacturing processes: Developing new extrusion, molding, casting, sintering, additive manufacturing or composite fabrication methods to overcome technical limitations involving consistency, precision or scalability.
- Material characterization and experimental testing: Conducting systematic investigations into material microstructure, chemical composition, mechanical properties or interactions between material components to resolve scientific or technological uncertainties.
What Materials Science & Biomaterials costs may qualify for SR&ED?
Once a project has been identified as potentially eligible for SR&ED, the next step is determining which expenditures are associated with the eligible R&D work. Depending on the nature of the project, potentially qualifying expenditures can include employee labour, materials, contractors, specialized equipment and certain lease or capital expenditures.
Labour
Materials
Contractors and Specialized Services
Lease and Capital Expenditures
Recent changes to the SR&ED program have made certain qualifying capital expenditures incurred after December 15, 2024, eligible for SR&ED.
The key question is whether your business is working to overcome a technological challenge that could not be readily resolved using existing knowledge or standard practices.
If your project involves these types of activities and costs, it may be worth assessing whether the work and associated expenditures qualify for SR&ED.
Not all materials science and biomaterials research projects, material formulation improvements, manufacturing process developments, or product modifications qualify for SR&ED. To be eligible, activities must address scientific or technological uncertainty, involve a systematic investigation or search through experimentation or analysis, and aim to achieve scientific or technological advancement. Routine material testing, standard formulation adjustments, conventional manufacturing processes, application of established technologies, and regulatory compliance testing do not automatically qualify for SR&ED incentives.
Other Funding Opportunities for Materials Science & Biomaterials Businesses
Other forms of government funding for materials science and biomaterials businesses are available too. Depending on the project, company, location and activities involved, additional funding may be available through federal, provincial and regional programs.
Potential sources may include:
NRC IRAP (Industrial Research Assistance Program):
Provides expert advisory services and potential financial support to eligible Canadian small and medium-sized businesses developing innovative technologies, products and processes. Materials science and biomaterials businesses may qualify for assistance with advanced material development, polymer research, biomaterials innovation, nanotechnology, experimental manufacturing processes and technical R&D.
NGen (Next Generation Manufacturing Canada):
Supports collaborative advanced manufacturing projects involving innovative production technologies, automation, robotics and smart manufacturing systems. Materials science businesses may benefit from opportunities supporting advanced materials processing, composite manufacturing, additive manufacturing, precision production and innovative manufacturing technologies.
Mitacs Accelerate:
Supports collaborative research internships connecting businesses with academic researchers to address scientific and technological challenges. Potential applications include advanced materials research, polymer development, biomaterials, nanotechnology, material characterization and experimental manufacturing processes.
NSERC Alliance Grants — Industry-Academic Research:
Supports eligible collaborative research projects involving Canadian academic researchers and partner organizations. Materials science and biomaterials businesses may participate in research involving advanced polymers, composites, nanomaterials, sustainable materials, surface engineering and emerging material technologies.
Additional federal, provincial and regional programs may also be available depending on the company's location and project objectives.
Government funding programs change frequently. Eligibility, application windows and available funding should be reviewed based on the specific project and timing. Funding programs also have specific eligibility requirements, application periods and eligible-cost rules. In some cases, SR&ED and government funding may interact, so businesses should consider their available incentives when planning and documenting a project.
How EVAMAX Can Help
Navigating Canada's tax incentives and grants can be complex. A single project may involve R&D activities, capital investment, manufacturing, commercialization and expansion, each of which may have different eligibility requirements.
EVAMAX can help you assess your project and identify the SR&ED, tax credit, grant and funding opportunities that may be available to your business.