In a recent Four Corners investigation, 'a whistleblower told a joint Four Corners and Fairfax investigation that tax office staff were instructed last year to ramp up the number of garnishee notices issued to businesses and individuals.'
'The whistleblower said staff were told “to start issuing standard garnishees on every case”, meaning small businesses were to be hit with notifications that the ATO would be automatically deducting money from their bank accounts to cover tax liabilities.'
These revelations have raised concerns for SME's that there is a lack of process or fairness in the way they issue garnishee notices. The ATO have released a document around this where they stated in 2016-17 they only issued 14,000 garnishee notices for small businesses, accounting towards '0.5% of collectible debt cases.'
So let's take a closer look at 'what a garnishee notice' is...
If you have an amount owing to the ATO and don't pay or willing to work with them to address your debt or repeatedly default on agreed payment plans they will be in a position to take stronger action.
While they are committed to supporting taxpayers who want to do the right thing, those that are seen as unwilling to work with them or don't have the capacity to pay or take steps to resolve their situation are likely to be issued with a Garnishee notice.
A garnishee notice is issued to a person or business that holds money for you, or may hold money for you in the future. It requires them to pay your money directly to the ATO to assist in reducing your debt.
What should you do if you receive a Garnishee Notice from the ATO?
The worst thing you could do is ignore the notice, they will ask you to contact them by a certain date to discuss the tax debt, it's critical you contact them as stated.
If you have received this garnishee notice directly, it's highly likely that we (your tax agent) may not be aware, so please give your advisor a call at HTA.
What happens if you ignore the notice?
If a business chooses to ignore the notice, the ATO will execute the notice on the date outlined.
This can put a business in a challenging position as it could result in all funds being drained from their accounts.
If you have any queries or concerns around whether you might be issued with a garnishee notice, please contact your accountant at HTA.