Bridging a tax refund: R&D offsets, GST and BAS refunds

Some of the most frustrating cash shortages involve money that is already yours. The work is done, the claim is calculated, the refund is on its way. But a tax refund arrives on the ATO’s timetable, and that timetable includes registration deadlines, lodgement, processing and, sometimes, a review.

A short-term loan secured on property can turn an expected refund into cash today. The refund repays the loan. The catch, and the reason this page spends time on timing, is that refunds can be delayed or reduced, and the property carries that risk.

Which refunds do businesses bridge?

Refund	Where it comes from	What drives the timing	Typical risk to the exit
R&D tax incentive refundable offset	Company tax return, after registering R&D activities	Registration, then lodging the return, then processing	Registration or claim queried; amount adjusted
Large GST credit on a purchase	BAS after a big taxable purchase, such as premises or plant	Your reporting cycle and holding a tax invoice	Missing tax invoice; refund retained for checks
BAS refund from exports or a build-up of input tax credits	Regular BAS	ATO verification of larger or unusual refunds	Refund retained for verification
Income tax refund	Tax return	Processing and possible review	Retained to verify details

The common thread: the money is likely, but the date is uncertain. That uncertainty is what a lender prices and what the term must allow for.

How long can the ATO hold a BAS refund?

The rules changed recently. The ATO’s retention framework was extended so that, from 1 July 2025, the ATO has 30 days rather than 14 to tell a business it is holding a BAS refund for checks. The ATO says the measure is now law.

What the ATO’s guidance says now:

• Notification within 30 days. If the ATO keeps your refund to verify it, it will tell you within 30 days of lodging the activity statement.
• Release on day 31. If you aren’t notified in that window, the refund is released on day 31, though checks may still happen later.
• Interest on held refunds. Legitimate refunds retained for more than 14 days earn delayed refund interest, paid by the ATO.
• Right to object. If the refund is still held 60 days after the 30-day period, you may object. That period extends by the time you take to provide any information requested.

The ATO says checks can be triggered by the size of a refund, how it compares with past lodgements or a change in the business’s circumstances. A first-time large refund is exactly the kind that attracts a look.

For income tax, the ATO says most returns lodged online are processed in about two weeks, and it may retain an income tax refund to verify details.

How does the R&D tax incentive timing work?

For research-led companies, the refundable R&D offset is often the largest single cash item of the year, and it arrives well after the money is spent.

• Register first. Business.gov.au says you must apply within 10 months of the end of the income year in which the R&D took place.
• Then claim. You enter the registration number in the R&D schedule of the company’s tax return and lodge it with the ATO.
• Refundable or not. The refundable offset applies to companies with aggregated turnover of less than $20 million. Larger companies receive a non-refundable offset, which reduces tax but doesn’t produce a cash refund.

So a company spending on R&D in July can wait well over a year for the refund. Many growth businesses bridge that gap with equity or grants. If a founder or director owns property, a secured bridge is another option, with the refund as the exit. If an equity round is the bigger piece, see capital raise bridge.

How the bridge works

1. Pin down the refund. Amount, type, lodgement status, any ATO correspondence, and your adviser’s view on timing.
2. Check for offsets. Ask your accountant whether any other tax debt might reduce the amount you receive.
3. Enquire. Property details, what’s owing on it, the amount, the refund and its expected timing.
4. Pick the security. A caveat loan for a short BAS bridge; a second mortgage for a longer R&D bridge; a private first mortgage over debt-free property for larger or longer needs.
5. Settle. Funds go to the business.
6. Repay from the refund, with a fallback if it is delayed or reduced.

Got a refund on its way and bills due before it lands? Request a tax refund bridge assessment; there’s no credit check to ask.

What happens if the refund is late or smaller than expected?

Plan for this before you sign, because it is the scenario that turns a sensible bridge into a stressful one.

If the refund is late:

• Tell us as soon as the ATO contacts you, and share what it has asked for.
• Answer ATO information requests quickly. The ATO’s objection window extends by however long you take to respond, so delays on your side lengthen the hold.
• If the term is running short, discuss an extension early. It is easier to arrange with weeks to spare than days. Our guide to loan term extensions explains how these are handled.

If the refund is reduced:

• Work out the shortfall in dollars and which fallback covers it: trading cash flow, another receipt, a refinance or an asset sale.
• If an adviser expects to object to the ATO’s decision, treat any amount still in dispute as uncertain until it is resolved.

If the refund is refused:

• The loan still has to be repaid, and it is secured on property. That is why the second exit, and the size of the loan relative to it, matter as much as the refund itself.

The safest bridges borrow against the part of the refund you would bet on, not the whole claim.

Who it suits

• Technology, engineering, manufacturing and life-science companies waiting on a refundable R&D offset, where the founders or directors own property.
• Exporters whose BAS regularly produces refunds, facing a one-off delay.
• Businesses that made a large taxable purchase, such as premises, plant or a fit-out, and are waiting on the GST credit. For property purchases, read funding GST on a commercial property purchase.
• Businesses with a refund under ATO review that need to keep paying staff and suppliers meanwhile.

When this isn’t the right move

• The refund is speculative. If your eligibility, registration or claim is uncertain, the exit is uncertain. Don’t put property behind a guess.
• The refund is small or close. If the ATO is likely to pay within a fortnight and the amount is modest, an overdraft or a short delay with suppliers is cheaper.
• There’s a significant risk the claim is reduced. If an adviser has flagged parts of the claim as contestable, borrow against the safe portion only.
• A cheaper specialist product exists. Some lenders offer facilities designed around R&D claims. If one fits and the timing works, compare it honestly.
• No second exit. If the refund were halved, could you still repay? If the answer is no, reduce the loan.

The warning signs that an exit is weaker than it looks are covered in exit strategy red flags.

What it costs (without the guesswork)

A refund bridge has no off-the-shelf price, so you won’t see one here. The property, the share of it being borrowed, the expected wait and how solid the refund is all feed into the pricing, which we set as sharply as the deal allows. You pay for:

• Interest, prepaid at settlement or capitalised and paid from the refund. With capitalisation, nothing leaves the business until the ATO pays.
• An assessment fee that varies by loan and is set out in the Letter of Offer.
• Legal and registration costs for lodging and later removing the security.

There’s no formal valuation required. If the security ranks behind a bank, as a caveat or second mortgage does, it will cost more than a first mortgage.

One honest point in your favour: if the ATO holds a legitimate BAS refund for more than 14 days, it pays delayed refund interest. That doesn’t make the bridge free, but it softens the cost of a long hold.

Documents you’ll need

• Identification for each borrower and guarantor.
• The lodged BAS or tax return, or a draft with your adviser’s sign-off.
• ATO correspondence about the refund, including any retention notice.
• For R&D: the registration confirmation or application, and the adviser’s claim summary.
• The address of the property and a current statement for any loan secured on it.

How fast

Once documents are in, funding is possible within 24 to 48 hours for up to $5m, and property-secured amounts from $20k to $250k can be possible the same day. Speed of funding is rarely the problem here; the length of the ATO’s process is. Spend your effort on the term.

Illustrative example: an R&D company bridging a refundable offset

Illustrative example: A Sydney engineering software company expects a refundable R&D offset of about $420,000 for the last income year. It has registered its activities, and its adviser expects to lodge the company return in eight weeks. Wages of $260,000 fall due over the next two months. A founder owns a house worth about $2,000,000 with $900,000 owing. At an illustrative 65% band on total debt, the house supports about $1,300,000 in total borrowing, leaving headroom of about $400,000.

Refund bridge	Amount
Wages and on-costs over 8 weeks	$260,000
Buffer for a further month	$60,000
Principal	$320,000
Interest for a 9-month term, capitalised	depends on the deal
Assessment fee and legal work	depends on the deal
Security headroom	about $400,000 at the illustrative band
Exit	The R&D refund, with the founder’s planned capital raise as backup

The return is lodged in week eight, and the refund arrives about five weeks later. The loan, including capitalised interest, is repaid in month four, well inside a nine-month term that was set for a possible review. For New South Wales title and security notes, see our Sydney private lending page.

Related situations

If the business is waiting on a customer rather than the ATO, see late-paying customers. If the business owes the ATO rather than the other way round, read paying an ATO debt with property equity. If wages and super are the immediate pressure, covering Payday Super and payroll has the detail. For how a lender thinks about the end of a loan, the exit strategy glossary entry is a quick read.

See if you qualify for a refund bridge

The ATO sets the pace on refunds; you can set the pace on the funding. Asking doesn’t involve a credit check, and only one direct lender, fundU, sees your enquiry. A specialist reads it in full. If the property details, the debt already on it and the refund’s status are all accurate, the answer we give you first is the answer that holds.

Find out if your property can bridge the refund, or read the guide to secured business loans.