ATO garnishee notices: what they mean for your business
An ATO garnishee notice requires a person or business that holds money for you, such as your bank, a trade debtor or your merchant card provider, to pay that money directly to the ATO. The ATO sends you a copy. For a business, it can take cash from the bank account or from customer payments with little warning, so it is often the point where a tax debt becomes a cash-flow crisis.
Who the ATO can send a garnishee notice to
A garnishee notice can go to anyone who holds money for you, or may hold money for you in the future. For businesses, the ATO gives these examples:
- banks and other financial institutions;
- trade debtors, meaning customers who owe the business money; and
- suppliers of merchant card facilities.
The recipient must pay the money to the ATO, not to you, and the ATO sends you a copy of the notice.
What it means for the business
- Cash disappears from the account. Money set aside for wages, suppliers or rent can go to the ATO instead.
- Customers find out. A notice to a trade debtor tells that customer you have an ATO debt.
- Other creditors may follow. Once cash flow tightens, other debts fall behind.
Where a garnishee notice sits in ATO recovery
| Stage | Typical ATO action |
|---|---|
| Early | Reminders, phone calls and offers of a payment plan |
| Firmer action | Garnishee notices, director penalty notices and reporting the debt to credit agencies |
| Legal action | Court claims, statutory demands and winding-up applications |
Behind with the ATO?
The earlier you act, the more options you have. Book a free 30-minute call with Luke D’Costa, Senior Manager – Debt Strategist. If you have received a director penalty notice, check your deadline with our 21-day DPN calculator.
Book a free 30-minute call Sydney 02 9660 3532 · Brisbane 07 3868 1888
In serious cases the ATO can also stop a person with a tax debt leaving Australia. See ATO departure prohibition orders.
What to do if you receive one
- Read the notice carefully. Note the amount, who it was sent to, and the debt it relates to.
- Contact the ATO. Engaging early gives you the best chance of agreeing a way forward.
- Check the company’s overall position. If it cannot pay its debts as they fall due, directors need advice on insolvent trading and formal options such as small business restructuring.
- Check for director penalty notices. Unpaid PAYG withholding, GST and super can become a personal debt for directors.
Common questions
What is an ATO garnishee notice?
A notice the ATO sends to a person or business that holds, or may hold, money for you, such as your bank. It requires them to pay that money directly to the ATO to reduce your tax debt.
Who can the ATO send a garnishee notice to for a business?
For businesses, the ATO lists banks, trade debtors and suppliers of merchant card facilities, as well as anyone else who holds or may hold money for the business.
Will I be told about a garnishee notice?
Yes. The ATO sends a copy of the notice to you.
Can a garnishee notice be issued to a director personally?
Yes, if the director has a personal tax-related debt, such as a director penalty. See what happens if you ignore a director penalty notice.
Does a garnishee notice mean the ATO will wind up my company?
Not necessarily, but it is a sign the ATO has moved to firmer action. If the debt stays unpaid, the ATO can take legal action, including a statutory demand and a winding-up application.
Sources: Australian Taxation Office, Firmer action we may take (last updated 17 September 2026); Taxation Administration Act 1953 (Cth) Schedule 1, section 260-5. This page is general information, not advice about your circumstances. Last reviewed: 9 October 2026.
Written by Luke D’Costa, Senior Manager – Debt Strategist. Luke has more than 16 years’ experience in insolvency and holds ARITA’s Advanced Certificate in Insolvency.
Reviewed by John Chand, Principal and Registered Liquidator. John has more than 17 years’ insolvency experience. Meet the team.
