ATO garnishee notices

An ATO garnishee notice requires someone who owes you money or holds money for you, such as your bank, employer or a customer, to pay it to the ATO instead of to you. The ATO issues it under section 260-5 of Schedule 1 to the Taxation Administration Act 1953 (TAA) without going to court, and every payment reduces your tax debt.

We act for businesses, directors and individuals across Australia facing garnishee action. As part of our work on tax debts, our team, which includes lawyers and a Chartered Accountant, checks the debt and your cash flow together.

What is a garnishee notice?

Section references below are to Schedule 1 of the TAA unless we say otherwise.

The ATO can give a garnishee notice to any third party who owes, or may later owe, money to you, including someone who holds money for you or for payment to you, even if it is payable only once a condition is met (s 260-5(2), (3)). The debt can be any tax-related liability, even one not yet due and payable (s 260-5(1)).

The ATO must send you a copy of the notice (s 260-5(6)), but the Act doesn't say when, so the third party may act on it before your copy arrives.

Who receives a garnishee notice?

The ATO's practice statement PS LA 2011/18 and its web guidance on garnishee notices (last updated 5 January 2026) list the usual recipients:

• Banks, which are expected to search for all your accounts at all branches (para 128)
• Employers, customers and trade debtors, for wages and other money they owe you
• Merchant card providers, for EFTPOS and card takings before they reach your account (para 115)
• Solicitors, agents and purchasers in a property sale
• Others, such as a company paying you dividends (para 134) or a government agency that pays you (s 260-10)

The ATO says it won't garnishee Centrelink or Department of Veterans' Affairs benefits unless you ask (para 122), and that a notice to a super fund has no effect until your benefits become payable, such as on retirement (para 130).

How much can the ATO take from your bank account or wages?

A notice can require the third party to pay the lesser of the debt and the money available, or a smaller specified amount (s 260-5(4)(a)). For wages, customer payments and other money paid from time to time, it can instead require a set amount or percentage of each payment until the debt is paid (s 260-5(4)(b)). Payment is due immediately, or within the time the notice specifies, after the money becomes owing to you (s 260-5(5)).

Third party	What the ATO generally takes
Bank	The available balance, or the debt if that is less
Employer	Usually no more than 30 cents in the dollar of the salary or wages payable
Merchant card provider	A proportion of card takings processed through the facility
Property sale	Generally the surplus after secured creditors are paid

The table draws on PS LA 2011/18 and the ATO's web guidance. For wages, the ATO may seek more if you have other income or your finances make it fair, and less if your pay is already garnished, for example for child support (paras 119–120).

Does a garnishee notice catch money paid in later?

It can. The ATO says a notice keeps operating until the third party has paid the debt stated in it or the ATO withdraws it, unless the notice sets an earlier end date, such as three months after issue (para 129). If you or someone other than the third party pays part of the debt to the ATO, the ATO must tell the third party, and the amount it must pay drops accordingly (s 260-5(7)).

Your bank, employer or customer can't ignore the notice. A payment it makes is treated as authorised by you and it is indemnified (s 260-15), and failing to comply is an offence (s 260-20). Only the ATO can change the notice.

What does a garnishee notice mean for a business?

A notice on a business account or merchant facility can leave too little for wages, rent and suppliers, and a notice to a customer or employer tells them you owe the ATO money.

The ATO's web guidance says it sends a warning letter first and uses garnishees when other efforts haven't worked or urgent action is needed to protect revenue. The law doesn't require a warning or final demand, and for some high-risk debts the ATO says it may act without one (PS LA 2011/18 para 19). It weighs your financial position, other debts, any defaulted payment plan and whether you have paid other creditors ahead of the ATO (see also para 113).

If insolvency is close

If you enter administration, liquidation, bankruptcy or another insolvency process after a notice is issued, the ATO says it won't ordinarily withdraw the notice, which continues to operate on the relevant amounts, such as money owed to a bankrupt before the bankruptcy (paras 136–137). The effect depends on the type and timing of the appointment, so get advice before one if you can. See statutory demands, winding up and bankruptcy.

If the debt is a director penalty

If the notice is recovering a director penalty from you, you have 60 days, starting on the day the ATO gives you your copy and not the day money is taken, to give it information supporting the illness or all reasonable steps defence. Outside court proceedings, you can rely on those defences only if you give the information within those 60 days and the ATO is satisfied of the defence on it (s 269-35(4A)). See defences to a director penalty notice.

How to respond to an ATO garnishee notice

1. Check the notice and the debt. Compare it with your ATO statement of account for estimates, penalties and amounts already paid.
2. Work out what you can pay. Prepare a short cash-flow forecast for the next few months.
3. Ask the ATO to vary or withdraw it. The ATO says it will consider any reasonable request to do so, provided you make suitable alternative arrangements for payment (para 114), usually a lump sum, a payment arrangement under s 255-15, or both. General interest charge keeps accruing under an arrangement (s 255-15(2)), so raise interest on the payment plan too.
4. Explain any hardship. In deciding whether to issue a notice, the ATO says it considers the likely effect on your ability to provide for your family or keep a business viable (para 113), so give evidence of that effect. Individuals in serious hardship can apply for release from some tax debts (s 340-5).
5. Dispute the debt if it's wrong. The TAA gives no right to object to the garnishee notice itself. A decision to issue one can be challenged by judicial review, but only on narrow legal grounds, such as the notice being issued without power. If the debt comes from an assessment you dispute, the usual challenge is an ATO objection to that assessment, within the objection time limits.

Does an objection stop a garnishee?

Not by itself. Even once a dispute reaches the Administrative Review Tribunal (ART) or a court, the ATO can generally recover the debt as if no review or appeal were pending (TAA ss 14ZZM and 14ZZR), although it says it will consider whether a garnishee would significantly prejudice your appeal (para 123).

A small business entity seeking ART review of an objection decision on an assessment relating to carrying on its business has one extra option. It can ask the ART for an order staying or affecting the decision, including one directing the ATO not to issue garnishee notices to specified third parties (TAA ss 14ZQ, 14ZZM(2) and 14ZZH; Administrative Review Tribunal Act 2024, s 32(2)). The ART must consider the order desirable to make the review effective, and the business must satisfy it that the review and the request are not frivolous, vexatious, misconceived, lacking in substance or intended to unduly impede tax administration (TAA s 14ZZH(2)).

How we help with a garnishee notice

• Check the notice. We check it against your ATO account and confirm what it covers and what has been taken.
• Put a proposal to the ATO. We build it around your cash flow, ask the ATO to vary or withdraw the notice and negotiate the timing of any further recovery action.
• Look at the debt itself. We review whether assessments, penalties or interest can be challenged or remitted.
• Work with your accountant. We work alongside them throughout.

Next step

Send us every page of the garnishee notice, your latest ATO statement of account, and a short note of who received the notice, what has been taken so far, your cash position and money due to you over the next few weeks. In a short first call we'll work out what the notice covers and what to put to the ATO first.