Garnishee notices are a tool used by the ATO to collect outstanding tax debts from delinquent taxpayers. It is normally only used by the ATO as a last resort when taxpayers repeatedly fail to pay taxes they owe.
The ATO can issue a garnishee notice to a person or business that holds money for you or may hold money for you in the future. This requires them to pay your money directly to the ATO to reduce your debt.
For individuals, the ATO may issue a garnishee notice to:
- Your employer or contractor.
- Banks, financial institutions and building societies where you have accounts.
- People who owe money to you from the sale of real estate, such as purchasers, real estate agents and solicitors.
For businesses, the ATO may issue a garnishee notice to:
- Your financial institution.
- Trade debtors.
- Suppliers of merchant card facilities.
Garnishee notices issued to banks typically take two forms: a once-off notice, or an ongoing notice. A once off garnishee notice requires the bank to pay a once off amount to the ATO, out of the money it holds in your name at the time of the notice. This is usually the lesser amount of the full tax debt and 30% of the balance in the account.
Receiving an ATO garnishee notice is a serious thing as it means you have lost control of your finances. The solution to garnishee notices is simple – just pay the tax debts you owe on time.