Case Study: ATO takes $120,000 under a Garnishee Notice 

Issuing garnishee notices is one of the methods the ATO utilises to recover tax debts. We have previously written about this issue in the past. We have also written about how you can avoid ATO garnishee notices being issued.

It is important to speak to a professional before a garnishee notice is issued by the ATO. We have encountered too many instances where clients should have done something earlier but failed to do so. The clients’ failure to act early eventually put them in a worse position.

This is one of those instances.

Background

A client was referred to us who was a director of a civil design engineering company. The company owed more than $1 million in unpaid tax, interest charges and penalties to the ATO. The ATO had been threatening to initiate recovery action for a considerable amount of time.

ATO Issued Garnishee Notice

When we met the client, the ATO had already issued a garnishee notice to the company’s bank. As a result, more than $120,000 was taken by the ATO from their bank account. This obviously affected the business’ cashflow and it had problems paying staff wages. That also meant that the director had to scramble to source funds if he wanted to continue trading the business.

How We Helped

Having discussed the company’s financial affairs and the director’s intentions, we provided and executed a plan to restructure the business. The plan involved liquidating one of the companies within the group and the closure of one of its three offices. While the director was able to continue trading, it was obviously not the best outcome. He would have been in a much better position had the ATO not taken $120,000 from the company.

What Should Have Been Done

A business with significant ATO debt should not leave the debt unresolved. Professional advice should be sought earlier rather than later. In this case, the business could have avoided a garnishee notice being issued if professional advice was sought earlier.

How We Can Help

While we offer a wide range of services including:

Depending on the circumstances of your business, we can tailor our advice to your needs. This may include a combination of the above services we offer.

So, if you wish to explore all the options that may be available to your business, get in touch with us on 1300 906 966 or send us an email at mail@cactusconsulting.com.au to arrange a free confidential initial discussion.

Posted on 25-06-21 in ATO Debts, Business, Business insolvency, Turnaround and Restructuring, Uncategorized.