R&D Tax Credits work differently here in Australia. If you spend...

R&D Tax Credits work differently here in Australia.

If you spend $1,000,000 on an eligible project, you usually incur the costs upfront, and then, come tax time, lodge an R&D Tax Claim where you then receive 43.5% back from the Govt. i.e. $435,000.

In this case, Neil and the team have applied for a guarantee from the govt. (the advanced finding) that their proposed expenditure will be compliant / eligible ahead of actually going and spending it.

Assuming $7M for DayDream 2, they would be eligible for an R&D Tax Incentive of ~$3M (or part thereof) which they'll receive after spending the $7M (or part thereof). Given it is effective known future cash inflows, they can go to a finance institution who will typically loan them $2.7M (with 10% kept as the fee) with that loan being collateralised against / paid back in future by the cash inflow from the Govt.