The Australian Taxation Office (ATO) can issue a Garnishee Notice to someone that holds money on behalf of an individual person or who may be liable to pay money to the person.

A Garnishee Notice can be issued for any type of personal tax debt including income tax debts, GST or PAYG Tax payable by a sole trader or debts owed under Director Penalty Notices.

The ATO will commonly issue Garnishee Notices to:

  • Banks who hold money on behalf of an individual. This requires the bank to pay all or a percentage of funds held in a bank account to the ATO; and
  • A person’s employers requiring the employer to deduct a percentage of the person’s gross wages each time they are paid and forward the funds to the ATO.

Garnishee Notices Issued to Employers

If a Garnishee Notice is issued to a person’s employer and then the person goes bankrupt, the ATO can keep enforcing it until at least the person is discharged from bankruptcy (a minimum of three years from when they lodge their Statement of Affairs). That means the ATO can keep deducting money from a person’s wages even while they are bankrupt. The ATO may even be able to keep the Garnishee Notice in place once the person is discharged from bankruptcy.

How to Minimise the Risks of Garnishee Notices

If you have a tax debt which you cannot pay, here are five things you can do to minimise the risks associated with Garnishee Notices:

  • Urgently get advice from a qualified professional.
  • If you cannot pay your debt over time, you should consider filing for bankruptcy or putting forward a proposal for a Personal Insolvency Agreement. Once a person is bankrupt or if a proposal for a Personal Insolvency Agreement is accepted, the ATO cannot issue Garnishee Notices to the person’s employer or any other party for existing tax debts.
  • If you can pay your tax debt over time or negotiate a payment arrangement with the ATO. The ATO will not issue a Garnishee Notice while a payment arrangement is in place and they will generally not do so if they think steps are being taken to negotiate a payment arrangement.
  • If the ATO has issued a Garnishee Notice to your employer, you can resign from your employment and the Garnishee Notice will not be applicable to your next employer. However, if a person is not bankrupt then the ATO can issue a Garnishee Notice to their new employer if they change jobs.
  • If the ATO has issued a Garnishee Notice to your employer you can make submissions to the ATO requesting a reduction in the amount taken from your wages each pay period. The ATO may consider reducing the amount it receives under a Garnishee Notice subject to a person’s personal and financial circumstances.

If you have a tax debt , you should urgently obtain professional advice and assistance.  This will help you avoid ATO recovery action.

We can assist you deal with your tax debt problems.  So, please call us for an initial no obligation free consultation.

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