What happens when a country starts taking manufacturing innovation seriously?
For Canada, it could mean turning the innovation already happening inside cleantech startups, deep materials companies, robotics developers, and the burgeoning ranks of hard tech founders into a real engine for growth and global competitiveness—and not a moment too soon, as companies race to rebuild supply chains, bring production closer to home, and find new ways to stay competitive in a rapidly shifting global economy.
Paul Davenport, Boast
“Solutions are being built today that need support to see the light. And if a hypothesis fails, at least we tested it. That’s really where Canada can make a difference.”
That’s exactly what the Scientific Research and Experimental Development program (SR&ED) is designed to support. The country’s largest federal R&D support program returned more than $4.5 billion in 2025 to more than 22,000 businesses, helping to offset the cost of experimentation and putting non-dilutive capital back into the hands of companies doing the work.
For years, SR&ED has been most closely associated with software and SaaS. But a wave of Canadian tech companies—the ones building hardware, running production trials, and integrating new robotic systems—have largely gone unsupported. That’s changing with
Recent enhancements to the program, making it more relevant to tech companies with a physical R&D footprint. The enhanced refundable credit limit has doubled, capital expenditures (capex) are eligible again, and publicly traded companies can now access the program’s strongest benefits for the first time.
The changes do more than expand access.
“It’s a virtuous cycle,” said Paul Davenport, Head of Content at Boast, a Canadian R&D tax credit platform. “If you have this funding, you can really dig into doing even more investigation. You can take more risk, because Canada wants to make it so that you don’t have to be so risk-averse to the point where nothing new ever gets developed.”
Rethinking how hard tech R&D gets funded
In manufacturing and hard tech, bringing out a new idea is often capex-intensive. It requires buying materials, running trials, and investing in equipment and facilities before you know if an idea will work.
The return of capex eligibility in Budget 2025 means those costs can now be claimed.
“The capital expenditures portion has become really lucrative for manufacturers,” said Davenport. “You need to pay for your materials, you need to pay for the actual facilities you’re going to be doing the R&D in, and now you can claim against that.”
For the first time since 2014, companies can now claim the equipment and facilities needed to do the R&D work, whether purchased or leased. The enhanced 35 percent refundable credit limit has doubled from $3 million to $6 million, adding up to $2.1 million back each year. Phase-out thresholds have been raised, so more mid-sized companies stay eligible longer as they scale. And publicly traded companies can access the enhanced credit for the first time, opening the door for larger players who’ve never had access to the program’s best benefits.
“It’s a very generous opportunity that you don’t see in other regions or in other countries,” says Davenport.
How Boast helps unlock R&D support
The SR&ED eligibility net is wider than many startups might realize. Cleantechs developing novel materials, companies integrating robotic systems into production lines, and hard tech founders running environmental sustainability trials all qualify—provided they’re solving problems no one has cracked yet and rigorously tracking the process as they go.
Vancouver-based CTK Bio, for example, is working on sustainable plastics and renewable materials. The company developed novel plastic alternatives through a rigorous R&D process—and is now working to bring that manufacturing back to Canada, where the economics are increasingly favourable, partly because of programs like SR&ED, according to Davenport.
“They’re developing processes using materials that haven’t been used in the market before,” he noted. “That’s exactly the kind of investigation that qualifies.”
But knowing what’s “SR&ED-able” is one thing. Getting the claim right is another. The program requires detailed documentation, clear technical explanations, and a compelling company narrative about the work. Building a claim can take dozens of hours, and risks pulling the people closest to the innovation away from the work that makes the claim possible in the first place.
The fix, said Davenport, is partnering with a specialist like Boast that “lives and breathes” SR&ED.
Combining AI with in-house tax and technical expertise to identify eligible work and turn it into a defensible claim, Boast has worked with more than 2,000 businesses, securing an estimated $625 million in R&D credits. According to the company, the platform saves companies up to 60 hours of claim preparation, and more than 98 percent of its claims are delivered without an audit.
“Solutions are being built today that need support to see the light,” Davenport said. “And if a hypothesis fails, at least we tested it. That’s really where Canada can make a difference.”
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Feature image courtesy Unsplash. Photo by Homa Appliances.