Packaging Manufacturing 

In today’s competitive and sustainability-driven market, the packaging manufacturing industry is undergoing a transformation. Companies are no longer just focused on aesthetics and function. Innovation now plays a critical role in materials, production methods, and environmental impact. To support this innovation, Canadian businesses can benefit from the Scientific Research and Experimental Development (SR&ED) program, a federal tax incentive that rewards companies investing in R&D.

For packaging manufacturers, SR&ED tax credits can be claimed when they tackle technological challenges that go beyond routine engineering or everyday improvements. These challenges are categorized as “technological uncertainties” and may occur during the development or improvement of materials, processes, or equipment.

What Qualifies as Technological Uncertainty in Packaging Manufacturing?

To qualify for SR&ED, your project must go beyond trial-and-error or regular product updates. The following areas are common sources of technological uncertainty in packaging manufacturing:

Material Innovations

Packaging companies frequently experiment with alternative materials to reduce environmental impact, extend product shelf life, or improve protective performance. When the success of a new material is uncertain, such as whether a biodegradable material can still preserve product integrity, it may qualify as SR&ED.

Manufacturing Process Improvements

Innovative methods that aim to reduce waste, improve cycle time, or cut costs can involve significant experimentation. If it’s unclear whether a new process can meet performance expectations without affecting quality, that constitutes a technological uncertainty.

Equipment and Tooling Modifications

When adapting or designing machinery to handle new packaging formats or eco-friendly materials, technical challenges often arise. If there’s uncertainty as to whether existing equipment can effectively process new substrates without failure or product degradation, SR&ED may apply.

Smart or Functional Packaging Development

Creating packaging with advanced features,  like embedded sensors for freshness tracking, introduces unique hurdles. The need to balance functionality with structural integrity or cost-effectiveness introduces a layer of technological complexity.

Sustainability and Environmental Challenges

As companies strive for recyclable, compostable, or reusable packaging, they must often resolve unknowns about durability, lifecycle, and compatibility with existing manufacturing systems. These efforts typically go beyond standard development and qualify as eligible R&D.

Scaling and Commercialization Issues

What works in a lab may not work at scale. If you develop a solution that performs well in prototype form but presents barriers in full-scale production, such as maintaining quality control or throughput rates, these issues may also be SR&ED eligible.

What Doesn’t Qualify for SR&ED?

Not all development efforts are eligible. The following typically fall outside the scope of SR&ED:

• Cosmetic changes in packaging design
• Routine product updates
• Standard quality assurance or control testing
• Market research or customer preference surveys

Ensure Your SR&ED Claim Is Solid

Documenting your development efforts, testing outcomes, and problem-solving steps is critical. Clear records help support your claim and demonstrate the scientific or technological uncertainties faced throughout the project. For packaging manufacturing companies looking to drive innovation, working with a seasoned SR&ED consultant can ensure all eligible activities are identified and properly claimed. The rules can be complex, but the rewards can be substantial.

Find Out Now if Your Packaging Innovations Qualify for SR&ED with Ayming Canada

At Ayming Canada, we specialize in guiding packaging manufacturers through the SR&ED process with a 98.5 percent claim success rate. Let’s talk about how your R&D efforts can translate into real funding.

Contact us today to schedule a free consultation.