The ATO can issue a Garnishee Notice to someone who owes you money or holds money on your behalf. Garnishee Notices can be issued for both individuals and companies who have tax debts.
The most common type of Garnishee Notice which the ATO will issue is a notice to your bank. This will require the bank to pay funds in your bank account to the ATO. The notice may also require your bank to pay a percentage of future deposits to the ATO.
Commonly the ATO will also issue Garnishee Notices to:
- Debtors, i.e. people who owe you money; and
- If you are earning salary and wages, your employer, in which case amounts will be deducted from your wages and paid to the ATO.
How to avoid ATO Garnishee Notices or minimise their impact
Negotiate a payment arrangement with the ATO
If you can’t pay your ATO debt in full it’s vital that you correspond with the ATO proactively. If you’re able to work out a payment arrangement with the ATO and comply with it’s terms the ATO won’t issue a Garnishee Notice.
Don’t keep all your bank accounts with one bank
The ATO will usually (at the very least) issue a Garnishee Notice to any known bank accounts of you or your business. These will be the first accounts to be targeted. It is therefore important to consider what funds you hold in bank accounts and what funds might be payable to the ATO if they issue a Garnishee Notice to your bank. If such a notice is issued it may be crippling for your business as you may not be able to pay future trading costs such as wages.
If the ATO issues a Garnishee Notice to your employer, the notice remains in effect even if you go bankrupt. While this may not be your ideal outcome, going bankrupt prior to any Garnishee Notice being issued will prevent the ATO issuing a Garnishee Notice to your employer. This is because the ATO will generally not issue a Garnishee Notice after you are bankrupt.
Make submissions to the ATO
In some circumstances the ATO may reduce the amount claimed in a Garnishee Notice or withdraw the notice if you contact them. Here at Tax Debt Solved we can assist you with making such a request, should it be appropriate.
Contact us for assistance
If you or your business have a tax debt and you would like to consider all the options, which may be available, the professionals at TAX DEBT SOLVED can help with a free, no-obligation consultation, contact us here.