Court finds limits to ATO’s powers to garnish

A recent court case has demonstrated the limitations of the Tax Office’s power to collect tax.

The case dealt with one of the Tax Commissioner’s many tax collection powers, the use of what are known as “garnishee” notices.

If a taxpayer has an unpaid tax liability, the commissioner can issue a notice to compel a third party that owes money to a taxpayer, or who holds a taxpayer’s funds (e.g. a bank or a super fund), to pay that money to the Tax Office in satisfaction of the tax debts of the taxpayer.