Garnishee notice

The ATO has issued a garnishee notice

A garnishee notice directs a third party who holds or owes you money — your bank, an employer, a trade debtor, a merchant card provider, or a solicitor holding sale proceeds — to pay the Australian Taxation Office instead of you. It is issued under section 260-5 of Schedule 1 to the Taxation Administration Act 1953 and requires no court order. HomeSec funds the underlying balance against property equity, paid directly to the ATO.

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Why this one is different from every other collection step

Most creditors have to sue you first. The Commissioner does not. A garnishee notice is issued administratively, it takes effect on the third party rather than on you, and the first many business owners know of it is a transfer that does not go through or a customer ringing to ask why they have been told to pay someone else.

It is also the step that attacks cash flow at the source. A notice on a trade debtor or a merchant facility does not just take money you have — it takes money as it arrives, which is precisely the money you were going to use to fix the problem.

Two shapes, and the difference matters

A point-in-time notice takes the lesser of the debt and whatever is available on the day. A continuing notice keeps taking — a specified amount, or a percentage of each credit — until the debt is satisfied or the notice is withdrawn or varied. Where the garnishee is an employer paying wages, the ATO generally limits the deduction to around 30%; there is no equivalent floor on a business account. If yours is continuing, trading through it is not a plan: the account cannot accumulate faster than the notice removes it.

Can a garnishee notice be stopped?

It can be withdrawn or varied, and the ATO will consider that where there is genuine hardship or where an acceptable alternative payment path is put in place. Two things are worth being clear about, because the internet is not:

Withdrawing a notice works forwards, not backwards. Amounts already collected are applied to your tax debt and reduce the balance; withdrawal stops future deductions rather than reversing past ones. There are exceptions — a notice issued in error, or one that leaves your ATO account in credit — but plan on the money being gone rather than returned.
The reliable way to end it is to remove the reason for it. Negotiation is worth attempting and sometimes works. Clearing the balance ends it as a matter of fact rather than as a matter of the Commissioner's discretion.

Contact the ATO regardless — a notice being on foot does not stop you dealing with them, and the outcome is generally better for people who engage than for people who go quiet.

Talk to your bank as well as to us

A garnishee on a business account frequently triggers a separate conversation with the bank about the facility itself. If you have an overdraft or an equipment line with the same institution, assume they now know, and get ahead of it. We have funded a number of files where the tax debt was survivable and the bank's reaction to the garnishee was not.

How we fund it

We lend against equity in real property and remit directly to the ATO using your payment reference number. The relevant features here are speed and independence from your banking position: a caveat can be lodged and settled without the first mortgagee's consent, and our assessment does not depend on the trading account that is currently being swept.

We do not require tax returns, current lodgements, or a clean credit file. Amounts run from $20,000 to $5,000,000, to 80% of value on residential security and 70% on commercial.

If a solicitor is holding sale proceeds

A notice can be served on a solicitor or agent handling a property sale, which means settlement funds you were relying on may not reach you. If you have a sale on foot and a tax debt outstanding, raise it with us before settlement week rather than during it.

How much you can borrow

Take the property's value, multiply by 80% for residential security or 70% for commercial, and subtract what is already owing on it. What is left is roughly what is available, between $20,000 and $5,000,000. Several properties can be added together, and the borrower does not have to be the owner — companies, trusts and sole traders — including start-ups, with everyone on title signing. Up to 80% on residential and 70% on commercial. Lower on large acreage, and LVRs may reduce on properties worth less than $800,000.

From the call to the money

Tell us the deal

Amount, purpose, timing, the property and how the loan gets repaid. A Lending Manager gives you an indicative answer on that call — usually in minutes.

Minutes

Conditional approval

Photo ID, a rates notice and your most recent mortgage statement. That is the whole list, and it takes about fifteen minutes.

About 15 minutes

Funds released

As little as 24 hours from a clean, complete scenario. Paid where you tell us — to your account, or straight to the ATO.

As little as 24 hours

What it costs

Priced per file, on the property, the position, the amount and the exit. No rate is published, because a rate with "from" in front of it is the best file's number. How it is priced, and every fee that exists.

✓Upfront: a small commitment fee, payable only once your loan is conditionally approved

✓Valuation fee: none — we don't use valuers

✓Monthly or line fees: none — no monthly, line or account-keeping fees

✓Fee to extend: none — no rollover fees, legal fees or rewriting the loan to extend

Questions we get on the phone

Can the ATO take money from my bank account without telling me?

The notice is served on the bank, not on you, and the bank must comply. The ATO generally notifies the taxpayer as well, but the practical experience for many business owners is that the money is gone before the letter arrives.

Can I get a loan while a garnishee notice is in force?

Yes. HomeSec lends against property equity rather than trading account conduct, and pays the ATO directly. The notice being in force is not a reason to decline — for most of the files we see in this category it is the reason for the call.

Will paying the debt lift the notice?

Clearing the balance removes the debt the notice attaches to. Ask the ATO to confirm the withdrawal in writing once the payment is applied, and tell your bank and any garnisheed debtor that it has been dealt with. Withdrawal stops future deductions; amounts already taken stay applied to the debt.

Does a garnishee notice mean a Director Penalty Notice is coming?

Not automatically, but they sit on the same collection path. If PAYG withholding, GST or superannuation guarantee charge is part of the balance, read director penalty notices now rather than later — that exposure is personal.

How fast can you settle?

Generally within 24 hours of documents being signed where the security is straightforward. Say on the first call whether the notice is point-in-time or continuing, because it changes how urgent the file is.

Can a garnishee notice be stopped?

A garnishee notice takes effect when the bank receives it, and the bank must comply. What stops the next one is paying the debt, or reaching an arrangement the ATO accepts — and the ATO accepts a payment in full readily. A loan secured by property, paid direct to the ATO, is the fastest way to be in that position.

Does a garnishee notice affect my credit file?

Not directly. The ATO reports business tax debts to credit bureaus only above $100,000 and more than 90 days overdue, after engagement has failed. A garnishee is a sign that point is near or past. The damage a garnishee does is to the bank account and to supplier and payroll relationships, which is why it is urgent.

How fast can HomeSec fund against a garnishee?

As little as 24 hours from a clean, complete scenario. A caveat over your property needs nobody's consent, which is why it is the instrument for a garnishee: the notice does not wait for a bank's discharge figure, and neither does the caveat.

Related situations

Five different problems sit under “ATO debt”, each with its own deadline and its own exposure. If yours is not the one on this page, start here.

Clearing an ATO tax debt Payment plan defaulted Director Penalty Notice Unpaid superannuation Tax returns not lodged

Talk to a Lending Manager

Tell us the balance, who the notice was served on and what property is available. 1300 93 83 87, Mon–Fri, 8:30am – 5:30pm Melbourne time. More on ATO and tax debt funding.

Sixty seconds, no documents

See if you qualify in sixty seconds

Three short questions, no credit check to apply and no financial statements. A Lending Manager reads it and calls you back with a real answer — not a call centre, not an algorithm.

That's the HomeSec Advantage.

See if you qualify Call 1300 93 83 87Mon–Fri, 8:30am – 5:30pm Melbourne time

Reviewed by Catriona Anderson, General Manager