The Australian Taxation Office appears to have become more proactive in recent months as far as debt collection is concerned, particularly in the case of recalcitrant taxpayers with significant levels of debt.
The usual garnishee orders employed by the ATO direct banks and other financial institutions to withdraw and remit from client bank accounts the full amount of the debt or 30% of the available monies held or debt owing, whichever is the LESSER amount. Further, the orders were effective at the time of service, and did not extend beyond!
We have now encountered broader garnishee orders which require the taxpayer’s financial institution to also deduct and remit the lesser amount up to 30% of the debt but effective for a three month period i.e. any amounts received/held within that period were covered by the order.
Further, this variation of garnishee orders extends beyond the three month period in that, to quote “Deductions are to be made until the end of the three month period OR until any money not yet due becomes available, WHICHEVER IS LATER”.
Clearly, the extended garnishee orders will impact on cash flow and at that stage after service of the garnishee order, it is too late to apply a remedy other than payment!
Should you be in these unfortunate circumstances it is important you maintain contact with the ATO and keep it informed, either through us as tax agent, or direct.