Have you got a personal tax debt you are struggling to pay? This might include a debt for income tax or a debt under a Director Penalty Notice.
If you do, you need to be aware that the ATO can issue a Garnishee Notice to your employer to recover the debt.
The way these notices work is that if the ATO issues one, your employer will have to pay a percentage of your before-tax wages to the ATO. After these amounts are paid to the ATO you will still have to pay tax and you will be then left with the remaining funds to meet your living expenses. This can obviously cause massive problems because you may no longer have sufficient funds to do this.
A further problem with this type of Garnishee Notice is that if it is issued and then you go bankrupt, the ATO can keep enforcing it until your bankruptcy is over. Therefore, you will still be paying amounts to the ATO even if you are bankrupt, which will usually be for a period of about three years.
The ATO will know whom you work for, as your employer has to notify them of your employment. So, as they know who employs you, it is easy to issue this type of Garnishee Notice.
What can you do to avoid the risk of a Garnishee Notice?
If you have a tax debt you can’t pay then you should consider the following to avoid the risk of the ATO issuing a Garnishee Notice:
- You should urgently get advice from a qualified professional.
- As part of getting advice you need to weigh up what you can pay the ATO over a reasonable period of time.
- If you can’t pay the ATO over time, you should file for bankruptcy. Once you’re bankrupt, the ATO can no longer issue Garnishee Notices.
- If you can pay your debt over a reasonable amount of time and negotiate a payment arrangement with the ATO, then they won’t issue a Garnishee Notice as a payment arrangement is in place and being complied with.
What can you do if the ATO issues a Garnishee Notice to your employer?
If the ATO has issued a Garnishee Notice to your employer, you can make submissions to the ATO and ask them to reduce the percentage of wages they are being paid. The ATO may consider this, however, there is no certainty that the process will be successful.
The other thing you may be able to do is resign from your employment. If you do this the Garnishee Notice won’t follow you to a new employer. However, if you’re not bankrupt the ATO can just issue a new Garnishee Notice. But, getting a new job at a similar wage can often be difficult and so this option may not always be easily available.
Contact us for advice and assistance
If you have a tax debt you need to urgently get professional advice to avoid the risk of ATO recovery action, including the risk of Garnishee Notices. Get in touch with us for a free, no obligation consultation on 1300 906 966 or send us an email at firstname.lastname@example.org