R&D Tax Incentive advance: funding innovation before the refund lands

Research and development runs on a strange cash cycle. You spend all year on engineers, materials, testing and prototypes, and the government’s contribution arrives well after the year ends, once your activities are registered and your tax return has been processed. For a growing company, the refund can be one of the largest single amounts it receives each year. It just arrives late.

An R&D bridge closes that gap. Event A is now: the wages, materials and suppliers you need to pay to keep projects moving. Event B is the refund.

How does the R&D Tax Incentive refund work?

The R&D Tax Incentive (R&DTI) is jointly administered by the Department of Industry, Science and Resources (DISR) and the ATO. Broadly:

1. Register your activities with DISR within 10 months of the end of the income year in which they took place. For a company with a 30 June year-end, that means by the following 30 April.
2. Lodge your company tax return with the R&D Tax Incentive schedule, quoting your registration number.
3. The ATO processes the return. For eligible companies, the refundable offset can exceed the tax payable and produce a refund.

Under the current rules, the refundable offset is available to R&D entities with aggregated turnover under $20 million that aren’t controlled by exempt entities. It’s calculated at the company’s corporate tax rate plus an 18.5 percentage point premium on eligible expenditure. Larger entities receive a non-refundable offset, which reduces tax rather than creating cash.

Changes announced in the 2026–27 Budget are proposed to start from 1 July 2028, including lifting the turnover threshold for the refundable offset to $50 million, raising the minimum annual spend from $20,000 to $50,000 and limiting refundability to firms in their first 10 years. The ATO notes this is not yet law; current rules apply until then. Our guide to the R&D refund timeline explains the steps and the delays to plan for.

What makes an R&D refund a strong exit?

A lender is asking the same questions an auditor would, just earlier:

• Is the company registered, or on track to register, for the year in question?
• Who prepared the claim? An experienced R&D adviser and a well-documented claim carry weight.
• What’s the estimated refund, and how was it calculated? Lenders usually lend against a portion of the estimate, not all of it.
• Any history? Previous years’ claims processed without issue are reassuring.
• Any tax debts? The ATO generally offsets refunds against tax debts. An outstanding BAS debt could reduce the refund that actually reaches you.

How is an R&D bridge secured?

This is where our approach differs from some specialist R&D lenders. We don’t lend against the refund entitlement on its own. The bridge is:

• secured over property (residential or commercial, $20k to $5m), with the refund as the planned exit; or
• for smaller amounts, an unsecured facility for a trading business, typically $5k to $500k, sized on turnover and bank statements, with the refund as the source of repayment.

That can suit companies that have already used an R&D advance elsewhere, need more than the refund estimate supports, or want one facility that also covers other working capital. See unsecured cash-flow bridges for how that side works.

Have a registration number and your adviser’s estimate? Find out what an R&D bridge could look like with a short enquiry.

An illustrative example

A company making agricultural sensors spends heavily on engineering through the year and expects a refundable offset of around $420k once its return is processed. Its biggest customer has just placed an order that needs a production run before then. The founders own a home with good equity.

They take a bridge secured over the home for $300k, about 70% of the estimated refund, with a nine-month term that allows for registration, lodgement and processing. The refund, when it lands, repays the bridge; any surplus goes back into the business. They also check with their tax agent that no BAS debt will be offset against the refund. (Illustrative scenario.)

What could delay or shrink the refund?

• Registering late in the 10-month window, or lodging the return late.
• ATO review of the claim or of related BAS lodgements.
• Offsetting against tax debts.
• Expenditure found not to be eligible, which reduces the offset.

Every one of these is a reason to take a term with buffer and borrow against a conservative share of the estimate. If the refund is only part of the picture, a grant bridge or a receivable exit may also apply.

How is the R&D refund actually calculated?

Your adviser will do the detailed work, but the principle is straightforward. The refundable offset is calculated on your eligible R&D expenditure, at your corporate tax rate plus the 18.5 percentage point premium for eligible companies. That figure is set against the company’s tax liability, and where the refundable offset exceeds the tax payable, the excess can be refunded.

What reduces the cash you receive:

• Expenditure found ineligible on review.
• Tax payable for the year, which the offset reduces first.
• Tax debts on other accounts, which the ATO can offset.

That’s why lenders work from your adviser’s estimate and then apply a margin. It’s also why a clean ATO position before lodgement makes the exit stronger.

Keep your R&D moving between refunds

Pausing projects to wait for a refund costs momentum, staff and sometimes customers. Tell us the refund estimate, where registration and lodgement are up to, and what security you have. It takes about a minute, there’s no credit check when you first enquire, and your details don’t get passed along a chain of lenders. A real person with experience of R&D gaps calls you back.

Accurate answers help most here: the refund estimate, the income year it relates to, and any tax debts. That’s how we find the right structure first time.

Bridge to your R&D refund →