Garnishee Orders: What It Means For You and Your Business

The Australian Tax Office (ATO) has several methods of recovering debt and have recently made an appearance in the headlines as they are facing an investigation over their garnishee orders, which appears to have become their preferred avenue and certainly we have seen an increased usage of this methodology. We think it is a timely reminder to talk about what garnishee orders mean for you and your business.

What is a Garnishee Order?

A garnishee order is a legal notice to surrender funds to settle an outstanding debt.

For Businesses

For businesses, the garnishee orders give the ATO power to access your businesses funds, bank accounts or other parties, to recover any debt you may have with them. This can be an outright deduction for the total amount owing or it can be incremental amounts, such as 15% of all revenue received via your merchant facility for example. The ATO may issue a garnishee notice to your financial institution, trade debtors or suppliers of merchant card facilities. This money will be accessed at a time the ATO sees fit and will have precedence over any payment to you.

For Individuals

For individuals that owe money to the ATO, you should be aware that the ATO has the right to issue the garnishee notice to your employer or contractor, banks, financial institutions and building societies where you have accounts or to your debtors, people who owe money to you to garnishee the funds from the sale of real estates, such as purchasers, real estate agents and solicitors. They will directly access funds to reduce your debt prior to you receiving payment from these recipients of the garnishee order.

Keep It From Affecting You or Your Business

It is important to know what your payment requirements are, understand your debt with the ATO and, if required, establish a payment arrangement or secure a payment plan to ensure that you don’t have this extreme measure affecting you or your business. Advivo supports our client’s with updated communication and solutions-based advice to ensure that this is only a last resort option and avoid additional stress when you are already running a business. We are your business partners and are here to help. In recent years, we have only had one case where this has occurred and the client was in dire need of support which we provided and we were able to turn it around with a solid payment plan and negotiation with the ATO to get them back on track.

If you suspect you may soon be the recipient of a garnishee notice or want to talk about getting a payment plan in place with the ATO, please give us a call at Advivo. We are here to help!