Alex Simmons — Co-Founder & CEO, Kashcade
Alex has extensive experience in business lending and R&D finance, and has overseen tens of millions in non-dilutive capital funded to Australian startups.
Australia’s R&D Tax Incentive allows eligible start-ups to claim back up to 43.5% of their R&D spend.
Most founders see this as a once-a-year rebate, but some founders see it differently:
A capital sequencing tool that lets them invest more in R&D, hire faster, and expand their eligible R&D base inside the same financial year.
This isn’t about accounting tricks. It’s about when capital becomes available and what you do with it. Let’s me walk you through a scenario to explain.
Scenario: A Typical Early-Stage R&D Start-Up
We’ll follow the founder of a SaaS or deep-tech start-up in Australia.
From July, the founder is running a small R&D team:
- 2 developers
- Founding engineer / CTO
- Some contractor support
Monthly eligible R&D spend: $50,000
This is steady, disciplined, and very normal.
Month 1-4: The First Early Move
By the end of Month 4, the founder has:
- R&D spend to date: $200,000
- Incremental RDTI accrued (43.5%): $87,000
Instead of waiting until tax time, the founder uses an R&D loan against the accrued position to borrow 80% of the refund accrued and eligible to claim.
At 80% of $87,000 that’s: $69,600 of capital available now.
Month 5-6: First Reinvestment - Hiring One More Engineer
The founder doesn’t “go big” all at once.
They use the $69,600 R&D loan to hire one additional developer, spreading the cost over the remaining 8 months of the financial year.
That’s roughly:
$8,700 per month in extra R&D spend
New monthly R&D spend (Months 5–12)
- Base R&D spend: $50,000
- New engineer: $8,700
- Total R&D Spend: $58,700
Month 7-8: The Flywheel Starts To Turn
Because monthly R&D spend increased after month 4, the founder has now accrued more R&D than they otherwise would have.
- Monthly R&D spend month 1-4 = $50,000
- Monthly R&D spend month 5 onwards = $58,700
By the end of Month 6, total R&D spend is higher and so is the accrued RDTI refund position.
The incremental RDTI refund accrued from the extra expenditure supports a second top-up to their R&D loan.
From months 5-6
- Incremental RDTI spend: $117,400
- Incremental RDTI accrued: $51,069
- 80% R&D Loan advance: $40,855
The founder uses the $40,855 loan to further work on eligible R&D evenly over the next 6 months. That adds another $6,800 per month in R&D spend.
New monthly R&D spend (Months 7-12)
- Base $50,000
- First investment: $8,700
- Second investment: $6,800
- Total: $65,500
Month 9-10: The Third R&D Loan
By the end of Month 8, the higher R&D spend has been running at a higher amount for another 2 months and can support another R&D loan top-up.
- Incremental R&D send (Months 7–8): $131,018
- Estimated RDTI accrued: $56,993
- 80% R&D Loan advance: $45,594
This time, the founder uses the capital to accelerate acritical technical milestone and spends the additional $45,594 loan evenly over the next 4 months by increasing contractor hours once again.
That adds:
$11,400 per month in additional R&D
Updated monthly R&D spend (Months 9-12)
- Base: $50,000
- Prior investments: $15,500
- Third investment: $11,400
- Totals: $76,900
Month 11-12: The Final Turn Of The Flywheel In The Same FY
By Month 10, the expanded R&D program has created enough additional accrued RDTI to support one final, smaller loan top-up.
- Incremental R&D spend (Months 9-10): $153,815
- Estimated RDTI accrued: $66,910
- 80% R&D loan advance: $53,528
Rather than hiring again, the founder uses this on a final push towards their technical milestone and spends the $53,528 loan on ramping up contractor hours for the next 2 months:
Reinvested across months 11–12, this adds:
Updated monthly R&D spend (Months 10–12)
- Base: $50,000
- Prior investments: $26,900
- Fourth investment: $26,800
- Total: $103,700
Final monthly R&D spend (Months 11-12)
$103,700 per month.
All of it eligible R&D.
What The Full Financial Year Looks Like
By sequencing R&D investment this way - early access, staged investment, realistic hiring - the numbers stack up.
Over 12 months of the financial year:
If the founder did not further invest in R&D
- Original R&D spend (no strategy): $600,000
- Estimated RDTI accrued: $261,000
Founder using R&D loans to increase R&D investment:
- R&D spend: $810,000
- Estimated RDTI accrued: $352,000
That’s a $91,000 increase in the R&D tax benefit within the same financial year, or an increase of 35%.
Not because the incentive rate changed. Because the R&D base expanded.
And What About the Cost of the R&D Loan?
The cost of these loans would total approximately 12% of the funds drawn.
So, with the $95k increase in refund, you’d still be $65k (25%) ahead.
Why This Works (And Why Most Founders Miss It)
The advantage comes from using R&D loans to invest in accelerated development, by putting it back into eligible R&D sooner.
Each reinvestment:
- Increases R&D capacity
- Expands the eligible base
- Supports the next reinvestment
The effect compounds quietly over the year. We call this effect an R&D flywheel.
The R&D Flywheel, in Plain English
- Spend on R&D
- Accrue an RDTI position
- Access part of it early
- Reinvest into more R&D
- Grow your eligible base
- Repeat carefully and compliantly
Each loop increases both product velocity and potential R&D benefit.
That’s the flywheel.
The Takeaway
You don’t increase your R&D refund by waiting for it.
You increase it by designing your funding strategy around how R&D actually scales.
Used thoughtfully, utilising R&D loans against your accrued R&D Tax Incentive you’re eligible to claim can help founders:
- Hire earlier
- Build faster
- Expand eligible R&D activity
- Reduce pressure to raise equity at the wrong time
That’s why some founders don’t just claim the R&D Tax Incentive.
They harness it and build their growth strategy around it.
