Our client is a SaaS platform business that has been around for half a dozen years. Their platform is primarily human resources and training. They have built platforms and systems for (primarily) the government sector, which can include entities such as hospitals or any other government agency.
The business, was founded by a highly successful entrepreneur who already had success in previous businesses. He invested significant time and personal equity into getting the business off the ground six or so years ago. They also raised external capital from equity investors which funded the early days. One of those investors is a family office, and together with their equity investment, they also provided a debt facility which carried an interest rate of 12%.
Our clients, research and development team is quite large. So, because they’re producing their own platforms and systems in house, they put a lot of costs into research and development. And the nature of the Australian tax system is that they get fairly sizable R&D refunds annually. At the end of 2025, their tax refund for R&D development was around $1.2 million from the ATO. Normally the ATO pays this fairly quickly. Around this time, the business had around $1 million in tax that they owed to the government. So, the net effect would be a positive position for our client of around $200,000. In this instance, the ATO decided to hold back the refund without reason or notice.
Holding $1.2 million back, whilst also the client owes $1 million, our client decided that, they’re going to get the refund any minute, and so did not pay their ATO outstanding balance with the thought that the ATO would, in essence, waiting for ATO to net it and refund them the 200K. This went on for well over six months, and the ATO decided to impose penalties for our client not paying their tax bill. This then incurred penalty interest, GIC interest, and it kept capitalizing. And so their debt position to the ATO started to increase and went up to well over the $1.2 million that they were owed. The family office debt facility that they had into the business was also coming to maturity. This combined with the squeeze from the ATO, which still had not been sorted, i.e. they had not received their tax refund, created a bit of a squeeze for the business with the upcoming maturity of the family office loan facility.
The team at Broker pulled together a debt restructure with a bank that allowed for our client to get formal unconditional approval on a facility that would pay out the family office. However, the bank’s conditions were that the ATO had to be paid out. We structured a deal where this ATO debt was paid out and in quick succession, the loan with the bank was settled to pay out the family office to avoid any loan defaults on that particular facility.
This highlights a difficult situation was navigated by the team at Broker to produce what was ultimately a very good result and quite a large cost saving to our client on the interest alone just with regards to the family office facility, saving them close to $250,000 per annum in interest costs, whilst also allowing them to get the ATO off their back. The ATO situation, unfortunately, is still pending with regards to the R&D refund.