Received a garnishee notice? What does it mean?
The ATO has an ability to collect money directly from your bank account or from your business’ debtors via a garnishee order. If you have reached this stage it generally means that most avenues have been exhausted for negotiation or settlement.
For business owners this is often the time that they call us, and unfortunately time is limited. Depending upon your bank this may mean that they close all your facilities or put your accounts on hold, for clients, this may mean that they shift their work.
What normally happens?
For most businesses we find that this may be the final days, as banking facilities have been cut cashflow is generally pretty restrained and you’ll find the options are starting to run out. In small industries it is generally accepted that there will be communication from customers if they have been approached by the ATO for payment direct.
Scrambling can work, but this is the time to analyse your business and work out a solution.
What can help?
There are two key elements to dealing with the garnishee notice and the fallout from it; communication and strategy. Doing nothing is not an option and the longer it is delayed the harder it will be to come up with a solution.
The hard part of this process is being analytical and not emotion, the best outcomes we have seen is where there is a global review of the business, getting good advice and not just throwing money into the business. All too often we have seen business owners place themselves into a worse position by grabbing expensive debt or utilising debt facilities under duress and ending up with limited options.
What do we do?
Our process is to start with the underlying viability of the business before any steps are taken, seeing if there is a business able to be reconstructed or saved, ensuring that any new investment will be best utilised in the business or if other options should be explored. I often find that visiting a business is as (or maybe more) valuable as remotely analysing financial data, in my 50 years of experience the face to face experience and being on the ground can tell a story that numbers alone can’t tell.
The recommendation may be a combination of things and this is where my experience comes into its own. Having seen the ups and downs sometimes the advice may be as brutal as shutting the door and walking away, sadly some businesses are unable to be saved.
Will it all go away?
Have you been promised that someone will negotiate a payment arrangement with the ATO or a reduction in your debt? The position of the Commissioner is very strict and without a realistic payment arrangement and a viability or security they are not going to accept a payment arrangement. Equally there are limited grounds that the primary debt will be reduced, anyone promising this is on another planet.
If you need more information, we’ve covered similar topics in our Library of resources: