Timing visibility
The lender needs to understand the income year, registration pathway, expected tax-return timing and how much of the anticipated R&D position is sufficiently developed to assess.
Pre-return R&D funding
The tax return can be months away while R&D costs are happening now.
The planned R&D funding product is designed for suitable companies that want to explore commercial funding before the relevant company tax return or anticipated R&D tax benefit, subject to evidence and credit assessment.
What matters
Start with the commercial reality.
Funding should address a defined business need and sit within a credible plan for the company after the facility is advanced.
Evidence before cash
The earlier the facility is sought, the more important contemporaneous records and credible expenditure reconciliations become.
Downside repayment
The company must remain capable of meeting the facility if the R&D benefit is delayed, reduced or not received as expected.
Registration and claiming are separate steps
The official program overview states that companies register eligible activities and then lodge the R&D Tax Incentive schedule with the company tax return to claim the tax offset. Registration generally must be applied for within 10 months after the end of the relevant income year. Confirm current rules with the program administrators and your adviser.
What “before the tax return” means
It does not mean the lender is issuing the R&D tax benefit. It means a separate commercial credit facility may be assessed using the expected R&D position as one part of the credit analysis.
The expected benefit is not guaranteed
Program registration is not a guarantee that activities or expenditure will ultimately be accepted. Any commercial facility therefore needs a documented repayment strategy and downside analysis.
Use the capital deliberately
Management should identify whether early funding is intended for continued R&D, payroll, product development, working capital or another approved business purpose and model the cash impact through to the expected tax cycle.
Official sources & further reading
General information only. This page does not constitute legal, tax, financial or credit advice. SME Capital Partners is in pre-launch and is not currently offering or approving credit through this website.