* Verb
1 decorate or embellish
2 serve notice on a 3rd party to seize money
A garnishee notice is served on a third party that owes you money (or holds money on your behalf), requiring that the third party pays some or all of that money direct to the entity issuing the notice. In recent years it has increasingly become one of the ATO’s favourite weapons to enforce the payment of outstanding tax debts.
This can include the diversion of wages owed to you by your employer, the contents of your bank accounts, proceeds of sale held by a property settlement agent or amounts owed by trade debtors.
Unlike your average creditor, the ATO does not need to seek a court order to issue and enforce a garnishee notice. You do need to be served with a copy of the notice.
If you are in the process of a court or AAT appeal in which you are disputing the assessment under which you owe the tax debt, then the ATO is required to consider whether garnishing funds would prejudice your ability to pursue the appeal. Recent case law suggests that this assessment by the ATO is at times open to challenge, as the taxpayer (and the Courts) may not always agree with the ATO’s assessment as to what will or will not prejudice the taxpayer’s capacity to address their tax appeal. We have also seen cases where garnishee notices have been improperly issued against joint bank accounts concerning individual debts – so the issue of a notice is not always the end of the story. Call us if you would like any further help in addressing a garnishee notice.
Cove Legal are experts in assisting clients with contentious tax matters and insolvency proceedings. We provide advice on ATO payment plans, director penalty notices, winders and all other aspects of ATO debt recovery action. Practice Director Roger Blow has acted extensively on behalf of the ATO in Perth and has specific expertise in tax related disputes.
Roger Blow
P: +61 8 6381 0326 or e: roger@covelegal.com.au
This publication is not intended to provide and does not provide legal advice. You should seek professional legal advice relating to your specific situation(s) before taking any action based upon its contents.