Garnishee Notices: When to Act

20 October 2017

What is a Garnishee Notice?

A Garnishee Notice is an Order obtained from Court by a Creditor who is owed money by another party (Debtor).  The Garnishee Notice allows the creditor to seek payment of the debt due by the debtor from a third party who holds funds or assets on behalf of the debtor, usually a bank, employer or third party who owes the debtor money.  Effectively the creditor bypasses the debtor to gain payment.  The issue of a Garnishee Notice is a serious matter and is often the first step in the process of a creditor taking further legal action against a debtor – if the debt is not extinguished the creditor may seek to wind up the debtor (in the case of a corporation), or bankrupt the debtor (in the case of an individual).

Who can receive a Garnishee Notice?

A party who receives a Garnishee Notice is compelled to pay money to the creditor.  A creditor can seek payment using a Garnishee Notice from the following parties:

  • The debtor’s employer

The creditor will seek to recover their debt from the debtor’s wages and salary.  Once a Garnishee Order is made, the creditor will serve it on the debtor’s employer.  The employer is then required to withhold a portion of the debtor’s wage and direct this payment to the creditor.  The debtor is still entitled to receive sufficient wages and salary for living expenses.  This arrangement may continue until the debt is repaid, unless a Court orders otherwise.

  • The debtor’s bank

If the court makes a Garnishee Order to the debtor’s bank, the bank will be required to pay to the creditor any funds available in the bank account.

  • A third party who owes money to the debtor

A Garnishee Order can be made for any third party who owes money to the debtor to pay any available amounts direct to the creditor, in satisfaction of the debtor’s liability.

Garnishee Notices and the Australian Taxation Office

The ATO is empowered under the Taxation Administration Act 1953 (“TAA”) to issue Garnishee Notices in respect of a debtor’s tax debt directly to a third party, without obtaining a Court order.  The ATO may issue a Garnishee Notice to a tax debtor’s employer, bank or third party to recover all or part of the outstanding tax debt.  The debtor will also be issued a copy of the notice.

How can I stop a Garnishee Notice?

Once a Garnishee Notice is issued to the relevant party (employer, bank or third party debtor), they are compelled to comply with the Notice and forward any relevant funds to the creditor.  To have a Garnishee Notice withdrawn, the debtor may be able to arrange payment in full of the debt, or to negotiate directly with the creditor to pay the debt by way of an arrangement.


If you are Director of a company, or an individual that has received notice of a Garnishee Notice issued to your employer, bank or third party, it is important to obtain advice as soon as possible about the best course of action in your circumstances.

If the creditor’s debt cannot be satisfied from the Garnishee Notice/s, the creditor may seek to take further action to recover their debt – ultimately resulting in your company being wound up, or personal bankruptcy in relation to an individual.

Contact Rodgers Reidy now for a confidential discussion in relation to your business or individual circumstances.

Further resources:-

1.       ASIC Information Sheet 42 – Insolvency: A guide for directors

2.       AFSA – - Personal Insolvency Information for Debtors

3.       ATO – – Garnishee Notices


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