diff --git a/pkg/sqlcmd/commands.go b/pkg/sqlcmd/commands.go
index 9665871c..8cb8facc 100644
--- a/pkg/sqlcmd/commands.go
+++ b/pkg/sqlcmd/commands.go
@@ -8,6 +8,7 @@ import (
 	"os"
 	"regexp"
 	"sort"
+	"strconv"
 	"strings"
 
 	"github.com/alecthomas/kong"
@@ -57,8 +58,7 @@ func newCommands() Commands {
 			regex:  regexp.MustCompile(`(?im)^[ \t]*:ERROR(?:[ \t]+(.*$)|$)`),
 			action: errorCommand,
 			name:   "ERROR",
-		},
-		"READFILE": {
+		}, "READFILE": {
 			regex:  regexp.MustCompile(`(?im)^[ \t]*:R(?:[ \t]+(.*$)|$)`),
 			action: readFileCommand,
 			name:   "READFILE",
@@ -143,7 +143,13 @@ func exitCommand(s *Sqlcmd, args []string, line uint) error {
 		}
 	}
 	query = strings.TrimSpace(params[1 : len(params)-1])
-	if query != "" {
+	s.batch.Reset([]rune(query))
+	_, _, err := s.batch.Next()
+	if err != nil {
+		return err
+	}
+	query = s.batch.String()
+	if s.batch.String() != "" {
 		query = s.getRunnableQuery(query)
 		s.Exitcode, _ = s.runQuery(query)
 	}
@@ -239,7 +245,7 @@ func readFileCommand(s *Sqlcmd, args []string, line uint) error {
 	if args == nil || len(args) != 1 {
 		return InvalidCommandError(":R", line)
 	}
-	return s.IncludeFile(args[0], false)
+	return s.IncludeFile(resolveArgumentVariables(s, []rune(args[0])), false)
 }
 
 // setVarCommand parses a variable setting and applies it to the current Sqlcmd variables
@@ -313,12 +319,17 @@ type connectData struct {
 	Database             string `short:"D"`
 	Username             string `short:"U"`
 	Password             string `short:"P"`
-	LoginTimeout         int    `short:"l"`
+	LoginTimeout         string `short:"l"`
 	AuthenticationMethod string `short:"G"`
 }
 
 func connectCommand(s *Sqlcmd, args []string, line uint) error {
-	if len(args) == 0 || strings.TrimSpace(args[0]) == "" {
+
+	if len(args) == 0 {
+		return InvalidCommandError("CONNECT", line)
+	}
+	cmdLine := strings.TrimSpace(args[0])
+	if cmdLine == "" {
 		return InvalidCommandError("CONNECT", line)
 	}
 	arguments := &connectData{}
@@ -326,16 +337,25 @@ func connectCommand(s *Sqlcmd, args []string, line uint) error {
 	if err != nil {
 		return InvalidCommandError("CONNECT", line)
 	}
-	if _, err = parser.Parse(strings.Split(args[0], " ")); err != nil {
+
+	// Fields removes extra whitespace.
+	// Note :connect doesn't support passwords with spaces
+	if _, err = parser.Parse(strings.Fields(cmdLine)); err != nil {
 		return InvalidCommandError("CONNECT", line)
 	}
 
 	connect := s.Connect
-	connect.UserName = arguments.Username
-	connect.Password = arguments.Password
-	connect.ServerName = arguments.Server
-	if arguments.LoginTimeout > 0 {
-		connect.LoginTimeoutSeconds = arguments.LoginTimeout
+	connect.UserName = resolveArgumentVariables(s, []rune(arguments.Username))
+	connect.Password = resolveArgumentVariables(s, []rune(arguments.Password))
+	connect.ServerName = resolveArgumentVariables(s, []rune(arguments.Server))
+	timeout := resolveArgumentVariables(s, []rune(arguments.LoginTimeout))
+	if timeout != "" {
+		if timeoutSeconds, err := strconv.ParseInt(timeout, 10, 32); err == nil {
+			if timeoutSeconds < 0 {
+				return InvalidCommandError("CONNECT", line)
+			}
+			connect.LoginTimeoutSeconds = int(timeoutSeconds)
+		}
 	}
 	connect.AuthenticationMethod = arguments.AuthenticationMethod
 	// If no user name is provided we switch to integrated auth
@@ -343,3 +363,47 @@ func connectCommand(s *Sqlcmd, args []string, line uint) error {
 	// ConnectDb prints connection errors already, and failure to connect is not fatal even with -b option
 	return nil
 }
+
+func resolveArgumentVariables(s *Sqlcmd, arg []rune) string {
+	var b *strings.Builder
+	end := len(arg)
+	for i := 0; i < end; {
+		c, next := arg[i], grab(arg, i+1, end)
+		switch {
+		case c == '$' && next == '(':
+			vl, ok := readVariableReference(arg, i+2, end)
+			if ok {
+				varName := string(arg[i+2 : vl])
+				val, ok := s.resolveVariable(varName)
+				if ok {
+					if b == nil {
+						b = new(strings.Builder)
+						b.Grow(len(arg))
+						b.WriteString(string(arg[0:i]))
+					}
+					b.WriteString(val)
+				} else {
+					_, _ = s.GetError().Write([]byte(UndefinedVariable(varName).Error() + SqlcmdEol))
+					if b != nil {
+						b.WriteString(string(arg[i : vl+1]))
+					}
+				}
+				i += ((vl - i) + 1)
+			} else {
+				if b != nil {
+					b.WriteString("$(")
+				}
+				i += 2
+			}
+		default:
+			if b != nil {
+				b.WriteRune(c)
+			}
+			i++
+		}
+	}
+	if b == nil {
+		return string(arg)
+	}
+	return b.String()
+}
diff --git a/pkg/sqlcmd/commands_test.go b/pkg/sqlcmd/commands_test.go
index 3a0b1382..90a32928 100644
--- a/pkg/sqlcmd/commands_test.go
+++ b/pkg/sqlcmd/commands_test.go
@@ -10,6 +10,7 @@ import (
 	"strings"
 	"testing"
 
+	"github.com/microsoft/go-mssqldb/azuread"
 	"github.com/stretchr/testify/assert"
 	"github.com/stretchr/testify/require"
 )
@@ -44,6 +45,7 @@ func TestCommandParsing(t *testing.T) {
 		{`:EXIT ( )`, "EXIT", []string{"( )"}},
 		{`EXIT `, "EXIT", []string{""}},
 		{`:Connect someserver -U someuser`, "CONNECT", []string{"someserver -U someuser"}},
+		{`:r c:\$(var)\file.sql`, "READFILE", []string{`c:\$(var)\file.sql`}},
 	}
 
 	for _, test := range commands {
@@ -156,7 +158,7 @@ func TestListCommand(t *testing.T) {
 }
 
 func TestConnectCommand(t *testing.T) {
-	s, _ := setupSqlCmdWithMemoryOutput(t)
+	s, buf := setupSqlCmdWithMemoryOutput(t)
 	prompted := false
 	s.lineIo = &testConsole{
 		OnPasswordPrompt: func(prompt string) ([]byte, error) {
@@ -174,19 +176,26 @@ func TestConnectCommand(t *testing.T) {
 	c := newConnect(t)
 
 	authenticationMethod := ""
-	if c.Password == "" {
-		c.UserName = os.Getenv("AZURE_CLIENT_ID") + "@" + os.Getenv("AZURE_TENANT_ID")
-		c.Password = os.Getenv("AZURE_CLIENT_SECRET")
-		authenticationMethod = "-G ActiveDirectoryServicePrincipal"
-		if c.Password == "" {
-			t.Log("Not trying :Connect with valid password due to no password being available")
-			return
-		}
-		err = connectCommand(s, []string{fmt.Sprintf("%s -U %s -P %s %s", c.ServerName, c.UserName, c.Password, authenticationMethod)}, 3)
-		assert.NoError(t, err, "connectCommand with valid parameters should not return an error")
+	password := ""
+	username := ""
+	if canTestAzureAuth() {
+		authenticationMethod = "-G " + azuread.ActiveDirectoryDefault
+	}
+	if c.Password != "" {
+		password = "-P " + c.Password
+	}
+	if c.UserName != "" {
+		username = "-U " + c.UserName
+	}
+	s.vars.Set("servername", c.ServerName)
+	s.vars.Set("to", "111")
+	buf.buf.Reset()
+	err = connectCommand(s, []string{fmt.Sprintf("$(servername) %s %s %s -l $(to)", username, password, authenticationMethod)}, 3)
+	if assert.NoError(t, err, "connectCommand with valid parameters should not return an error") {
 		// not using assert to avoid printing passwords in the log
-		if s.Connect.UserName != c.UserName || c.Password != s.Connect.Password {
-			t.Fatal("After connect, sqlCmd.Connect is not updated")
+		assert.NotContains(t, buf.buf.String(), "$(servername)", "ConnectDB should have succeeded")
+		if s.Connect.UserName != c.UserName || c.Password != s.Connect.Password || s.Connect.LoginTimeoutSeconds != 111 {
+			t.Fatalf("After connect, sqlCmd.Connect is not updated %+v", s.Connect)
 		}
 	}
 }
@@ -212,3 +221,30 @@ func TestErrorCommand(t *testing.T) {
 		assert.Regexp(t, "Msg 50000, Level 16, State 1, Server .*, Line 2"+SqlcmdEol+"Error"+SqlcmdEol, string(errText), "Error file contents")
 	}
 }
+
+func TestResolveArgumentVariables(t *testing.T) {
+	type argTest struct {
+		arg string
+		val string
+		err string
+	}
+
+	args := []argTest{
+		{"$(var1)", "var1val", ""},
+		{"$(var1", "$(var1", ""},
+		{`C:\folder\$(var1)\$(var2)\$(var1)\file.sql`, `C:\folder\var1val\$(var2)\var1val\file.sql`, "Sqlcmd: Error: 'var2' scripting variable not defined."},
+		{`C:\folder\$(var1\$(var2)\$(var1)\file.sql`, `C:\folder\$(var1\$(var2)\var1val\file.sql`, "Sqlcmd: Error: 'var2' scripting variable not defined."},
+	}
+	vars := InitializeVariables(false)
+	s := New(nil, "", vars)
+	s.vars.Set("var1", "var1val")
+	buf := &memoryBuffer{buf: new(bytes.Buffer)}
+	defer buf.Close()
+	s.SetError(buf)
+	for _, test := range args {
+		actual := resolveArgumentVariables(s, []rune(test.arg))
+		assert.Equal(t, test.val, actual, "Incorrect argument parsing of "+test.arg)
+		assert.Contains(t, buf.buf.String(), test.err, "Error output mismatch for "+test.arg)
+		buf.buf.Reset()
+	}
+}
diff --git a/pkg/sqlcmd/parse.go b/pkg/sqlcmd/parse.go
index 0fc6a47c..e9192c78 100644
--- a/pkg/sqlcmd/parse.go
+++ b/pkg/sqlcmd/parse.go
@@ -58,7 +58,7 @@ func readCommand(c Commands, r []rune, i, end int) (*Command, []string, int) {
 	return cmd, args, i
 }
 
-// readVariableReference returns the length of the variable reference or false if it's not a valid identifier
+// readVariableReference returns the index of the end of the variable reference or false if it's not a valid identifier
 func readVariableReference(r []rune, i int, end int) (int, bool) {
 	for ; i < end; i++ {
 		if r[i] == ')' {
diff --git a/pkg/sqlcmd/sqlcmd_test.go b/pkg/sqlcmd/sqlcmd_test.go
index 60f78263..2799b87b 100644
--- a/pkg/sqlcmd/sqlcmd_test.go
+++ b/pkg/sqlcmd/sqlcmd_test.go
@@ -217,7 +217,8 @@ func TestGetRunnableQuery(t *testing.T) {
 func TestExitInitialQuery(t *testing.T) {
 	s, buf := setupSqlCmdWithMemoryOutput(t)
 	defer buf.Close()
-	s.Query = "EXIT(SELECT '1200', 2100)"
+	_ = s.vars.Setvar("var1", "1200")
+	s.Query = "EXIT(SELECT '$(var1)', 2100)"
 	err := s.Run(true, false)
 	if assert.NoError(t, err, "s.Run(once = true)") {
 		s.SetOutput(nil)