One of our consultants covers the impact of garnishee notices here.
Planning to ignore the notice? The worst thing you can do is ignore the notice or do nothing.
We have recently seen a dramatic increase in the number of garnishee notices that are issued by the ATO and trade creditors and there is an expectation that this is only the tip of iceberg when it comes to collection activities.
If you have recently received a garnishee notice and are wondering what your options are and how to deal with it, the team at C&D are here to help. We are not aligned with any specific insolvency practitioners and will give independent advice as to what works best in your situation.
We work closely with our clients to determine the best approach for the circumstances you are facing.
What is a garnishee notice?
The ATO can issue a Garnishee Order to a person or business that holds money on your behalf or owes money to you. This requires them to pay your money directly to the ATO to reduce your tax debt. A Garnishee Order is most commonly issued to a company’s bank, a company’s debtors (accounts receivable) or a merchant facility provider. You will simply receive a copy of the notice issued.
The ATO will issue one of two types of Garnishee Notice to your bank. These are either a Point in Time Notice or a Continuing Notice.
What type of notice did you receive?
Point in time notice
A Point in Time Notice is a one-off payment to the ATO. This type of Garnishee Notice will generally require your bank to pay the full tax debt out of your account, or 30% of the balance held, whichever is less.
A continuing notice is exactly as it sounds. You will have to make continuing payments to the ATO. So your bank will be required to pay the money held in your company’s bank account, as well as amounts deposited in future.
Act quickly! Time is ticking and the ability to negotiate will reduce each day.
Check whether the funds are still in your bank account. If they are then it is important to be in control of these funds and to open negotiations with the debtor.