ATO garnishee notice: when the ATO takes money from your bank or takings

What is a garnishee notice?

A garnishee notice is one of the ATO’s firmer collection tools. Instead of waiting for you to pay, it goes to someone who holds money for you, or owes you money, and requires them to pay the ATO instead. It’s a legal requirement for the person who receives it — your bank can’t simply choose to ignore it.

Garnishee notices are used widely. They tend to arrive after reminders, warning letters and sometimes a collection agency have failed to get a response, though the ATO can use them whenever it considers them appropriate.

Who can receive one?

The ATO says it may issue a garnishee notice to:

Recipient	What happens
Banks and financial institutions	Money in your accounts is paid to the ATO, in a lump sum or over time
Employers	Part of an individual’s wages is paid to the ATO
Businesses or individuals who owe you money	Your customers pay the ATO instead of you
Merchant facility providers	For businesses, a proportion of funds processed through EFTPOS and card facilities goes to the ATO

For a retailer, cafe or clinic, a garnishee on the merchant facility can be the most disruptive: a share of every day’s card takings goes to the ATO before the business can use it for wages or suppliers.

What does your copy tell you?

You’ll be sent a copy. The ATO’s advice is plain: don’t ignore it. The notice tells you who received it, how much they’re required to pay, and how often. Read it carefully — you need to know exactly which accounts or customers are affected so you can manage cash flow in the meantime.

How do you get a garnishee notice withdrawn or varied?

The ATO says it may agree to lift or reduce a garnishee notice once you put an acceptable alternative way of paying in place. In practice that means one of:

1. Paying the debt in full. The cleanest outcome. Once paid, ask the ATO to withdraw the notice and confirm with the recipient.
2. A payment plan the ATO accepts. Show you can meet instalments and keep new tax current.
3. A secured arrangement. For larger debts, offering security may help.
4. A variation. If the garnishee is taking so much that the business can’t function, explain that to the ATO with evidence — a variation may be possible.

Have your lodgements up to date before you call. It’s the first thing the ATO will check.

How can funding help?

When a garnishee notice is in place, time matters. Every day it stays in force, money that should be paying wages and suppliers goes to the ATO — which can push the business further behind on everything else. Funding can end it:

• Property-secured loans ($20,000 to $5,000,000) can be arranged quickly — funding is possible in as little as 24 hours for property-secured loans.
• Unsecured loans (typically $5,000 to $500,000) for businesses with steady deposits.
• Where arranged, the ATO is paid directly at settlement. Then you ask for the notice to be withdrawn.

An illustrative example: a dental clinic’s merchant facility was garnisheed for overdue GST and PAYG withholding. A second mortgage over the principal dentist’s investment property cleared the activity statement account in full. The clinic’s accountant asked the ATO to withdraw the notice the same day the payment showed, and the clinic’s takings returned to normal.

What should you not do?

• Don’t move money around to dodge the notice. It doesn’t work and can make your position much worse.
• Don’t ignore it. It won’t go away, and other firmer action may follow.
• Don’t sign up with the first person who calls. If someone contacts you offering to “remove” a garnishee for a fee based on your debt, slow down and check who they are. Our questions to ask any adviser list will help.

What about director penalties?

A garnishee notice often appears alongside, or shortly before, a director penalty notice. If you’re a company director with unpaid GST, PAYG withholding or super, read director penalty notices now, and check whether any amounts are locked down. Paying the company liability in full deals with both problems at once.

How do you manage cash flow while a garnishee is in place?

While you work on getting the notice withdrawn, prioritise wages and super, talk to key suppliers early, and keep the ATO informed of your progress. If the garnishee is on a merchant facility, monitor daily settlements so you know exactly how much is reaching your account.

Talking to your bank and customers

If a garnishee has gone to your bank, ask the bank to explain exactly how it’s being applied — a lump sum, or a share of each deposit. If it has gone to a customer, a short, calm note explaining that you’re resolving the matter with the ATO can protect the relationship. Most business customers have seen this before, and what they care about is that supply continues and the issue is being handled.

Need to stop a garnishee quickly?

If a garnishee notice is taking money from your account or your takings, start your enquiry now. It takes about a minute, there’s no credit check, and your details aren’t distributed to a list of lenders. A real person will look at the notice and your ATO balance and tell you honestly whether funding is the fastest way to get it lifted. Please give accurate amounts and tell us who received the notice.