ATO Garnishee Orders — challenge or manage a notice before your business stops

The ATO issues garnishee notices under section 260-5 of the Tax Administration Act 1953. The ATO can serve the notice directly on any third party who holds money for or owes money to the taxpayer — without needing a court order. The notice requires the third party (such as a bank, trade debtor, or employer) to pay the ATO up to the amount of the tax debt rather than paying the taxpayer. The ATO does not need to give the taxpayer prior warning before serving a garnishee notice.

Section 260-5 of the TAA 1953 allows the ATO to serve garnishee notices on any person or entity that holds money for the taxpayer or owes them a debt. This includes: banks and other financial institutions (to freeze or debit account balances); trade debtors (customers who owe you money for goods or services); and employers (to divert salary or wages). The ATO can issue multiple garnishee notices to multiple third parties simultaneously, covering the full tax debt from each.

Yes. If there is a genuine dispute about the underlying tax debt — for example if you have lodged or intend to lodge an objection — you can apply to the Federal Court or the Administrative Review Tribunal for a stay of the garnishee pending resolution of the dispute. You can also negotiate directly with the ATO to have the garnishee released in exchange for a payment arrangement or security over assets. If the notice was issued without lawful basis — for instance against money not held for you — it can be challenged on that ground too.

A garnishee notice remains in force until the full amount specified in the notice has been collected, or until the ATO withdraws it. For ongoing accounts (such as bank accounts), a continuing garnishee requires the bank to pay all future credits up to the outstanding tax debt — not just funds held at the time of service. This means ongoing income deposited into a garnished account can be captured as it arrives. The ATO will normally withdraw the notice once the underlying debt is paid in full or a formal payment arrangement is in place.

Yes. If a garnishee notice is preventing you from meeting essential business or personal expenses — such as wages, rent, or critical supplier payments — you can apply to the ATO for hardship relief under its vulnerable taxpayer and financial difficulty policies. The ATO has discretion to partially or fully release a garnishee in cases of genuine hardship, and may agree to a deferred payment arrangement or instalment plan as an alternative. A lawyer can help you document the hardship case and negotiate with the ATO on your behalf.

A garnishee notice under section 260-5 of the TAA 1953 is an administrative tool the ATO can use without a court order — it requires the third party to pay funds to the ATO. A freezing order (also called a Mareva injunction) is a court order that prevents a person from dealing with or disposing of assets. Freezing orders are more commonly sought in fraud or asset-dissipation cases. The ATO may seek a freezing order in the Federal Court in serious cases, particularly where it suspects assets are being hidden or transferred to avoid a tax debt, and a court order carries more severe consequences for non-compliance.