ATO Garnishee

Received a Garnishee Notice or Order? Avoid losing cash flow

Pursuant to Section 260-5 of the Taxation Administration Act 1953, the Australian Taxation Office has the power to issue a Garnishee Notice in order to collect taxes due by a company (the taxpayer). The two most common Garnishees are as follows;

  1. Garnishee to Debtors – the ATO can collect a company’s debtors by providing a company’s debtors with a letter requiring that the monies owed by the debtor to the company are not to be paid to the company that is owed the monies, but instead, directly to the ATO.
  2. Garnishee to Bank Account – the ATO can collect funds that a company holds in a bank account by providing a notice to the Financial Institution requiring that monies held in a designated bank account of the company be paid directly to the ATO.

A Garnishee Notice can have detrimental effects to a company’s cash flow if issued as it takes away cash the company expects to receive. If a Garnishee Notice has been issued to either your debtors or your bank where your accounts are being held, you may find yourself having insufficient cash to pay employees or other critical creditors and causing disruption to your business.

If a Garnishee Notice has been issued in relation to a tax debt owed by your company or you would like more information in respect to Garnishee Notices contact Insolvency Choice today.