What is a garnishee notice
A garnishee notice is one of the firmer action we may take to collect unpaid tax debts.
A garnishee notice requires a third party or someone who owes you money, to pay the required amount to us, instead of to you. These payments go towards reducing your tax debt.
We issue garnishee notices under section 260-5 of Schedule 1 of the Taxation Administration Act 1953.
You will be served a copy of the garnishee notice so you’re aware of the action being taken, so it's important to ensure your contact details are up to date.
Further information on the ATO’s approach to issuing garnishee notices is available in PS LA 2011/18 Enforcement measures used for the collection and recovery of tax-related liabilities and other amounts.
Before we issue a garnishee notice
Before we issue a garnishee notice we'll send you a warning letter advising you to pay your debt. If you pay your debt in full, you'll be able to avoid collection action. If you can't pay it in full, you may be able to set up a payment plan.
Who we issue a garnishee notice to
We may issue a garnishee notice to:
- banks or financial institutions that hold your accounts
- employers who pay your wages or salary
- businesses or individuals who owe you money (for example, trade debtors)
- merchant card providers who process your customer payments
- solicitors, real estate agents or purchasers involved in the sale of property you own.
When we may issue a garnishee notice
When deciding to issue garnishee notices we consider each situation carefully and take this step when:
- other efforts to resolve the debt haven’t worked
- urgent action is required to protect revenue or ensure fairness.
We also consider:
- how much you owe and how long the debt has been unpaid
- if you’ve made reasonable efforts to work with us to manage your debt
- if you are defaulting on payment plans
- your financial circumstances, including signs of hardship or vulnerability
- whether you’ve made payments to others instead of paying the ATO
- how the debt affects the tax system and other creditors
- if there is any deliberate tax avoidance, illegal phoenixing or criminal activity.
Types of garnishee actions
We tailor garnishee actions depending on your circumstances and whether you're an individual or a business.
The amount and frequency of garnishee deductions will vary depending on the third party and your financial situation.
For individuals we may take garnishee action on:
- bank accounts
- up to the available balance in your account or your overdue debt, whichever is less
- wages and salary
- employers may be required to deduct a reasonable percentage (usually, up to 30 cents in the dollar) of your post-tax income.
For businesses we may take garnishee action on:
- merchant-card or trade facilities
- a proportionate percentage of funds, processed through merchant facilities (for example, EFTPOS, credit card).
- property sale proceeds
- a garnishee notice can be issued to a solicitor, the purchaser, or the agent involved in the sale. We garnishee the surplus equity after secured creditors are paid. Before issuing a notice we confirm legal ownership and available funds.
- trust monies held by a third party
- we may issue a notice to third parties holding funds or trust monies (for example, solicitors or receivers), limited to available equitable funds.
Once a garnishee notice is issued
If you receive your copy of a garnishee notice, don't ignore it. It will tell you who received the notice, how much they are required to pay us, and how often. The recipient is legally required to follow the notice.
Garnishee notices may continue until the full amount is paid, unless we vary or withdraw the notice.
If you're experiencing financial difficulty, you should contact us immediately. You may be able to negotiate with us to withdraw or vary a garnishee notice if you make suitable alternative payment arrangements.