ASBFEO concerned with rise in ATO garnishees

The number of ATO garnishee debt-recovery notices released each day, as reported in the Acting Inspector-General of Taxation and Taxation Ombudsman’s (IGTO) review,  seen as a matter of great concern by the Australian Small Business and Family Enterprise Ombudsman.

“When a garnishee is issued on a small business, funds are removed from the business’s bank account,” Ombudsman Kate Carnell said. “This means the business may not be able to pay staff and suppliers and will probably cease to trade.”

The IGTO review stated that the inappropriate use of garnishee notices can severely affect a small business’s cashflow. The ASBFEO noted that it is a very serious matter.

“Given the draconian nature of the notices and the lack of judicial or other external oversight of notices before release, they should be used only as a last resort … if at all,” Ms Carnell said.

“We are pleased the IGTO did not uncover a concerted ATO ‘cash grab’ on small businesses or a link between debt staff personal performance and placement of garnishee orders. And we welcome agreement by the ATO to the IGTO recommendations that will help improve existing systems to anticipate problems rather than responding to problems as they become known.”

The ASBFEO continues to research historical cases of early debt recovery by the ATO, which will include the consideration of garnishee orders.

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