If your company is insolvent and having difficulties honouring its tax debts, it is at risk of receiving a garnishee notice from the Australian Taxation Office (ATO). Such an action can have a serious impact on your household budget or your company’s cash flow.
A garnishee notice allows the ATO to directly recover funds for an outstanding tax debt from a person or business. Once the garnishee notice has taken effect, the ATO can remove money from your bank account and/or collect payments from your debtors until your tax debt is paid in full.
It is also possible for an individual to receive a garnishee order from the ATO or a creditor who has obtained a court judgement. Generally speaking, it will be issued to your employer, and the funds needed to recover the debt will be taken directly from your wages.
The only way to put a stay on a garnishee is to declare yourself or your company insolvent and enter into a formal insolvency arrangement. For an individual this would take the form of either bankruptcy, or a Personal Insolvency Agreement. For a company, the garnishee notice can be stopped if the company appoints a voluntary administrator .
If you have received a garnishee order and are having money taken out of your wages or your company’s bank account, you need to seek professional advice as soon as possible. It may be possible to come to a formal arrangement with the ATO that will cancel out the garnishee you have received.
If you are the director of a company, you need to act much more quickly. At the first sign of potential insolvency, call an insolvency expert to discuss your options. If the ATO issues a garnishee notice before you have attended to your company’s situation, you will not be able to put a stop to it, and the resulting effects could permanently damage your business.
To find out more about garnishee notices and how Insolvency Services Australia can help you, contact us on 1800 003 883. We proudly offer a 24 hour insolvency hotline. You can therefore call us when it is convenient to you on 1800 003 883.