Money ATO facing investigation over garnishee orders which let tax collectors grab money from your bank account

05:16  17 may  2018
05:16  17 may  2018 Source:   abc.net.au

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The whistleblower said staff were told “to start issuing standard garnishees on every case”, meaning small businesses were to be hit with notifications that the ATO would be automatically deducting money from their bank accounts to cover tax liabilities.

A garnishee notice is a debt- collecting tool that allows the tax office to order a bank to hand over money from the taxpayer’s account , without consulting the taxpayer.

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The investigation follows allegations aired in an ABC Four Corners program in April that the ATO has inappropriately used garnishee notices to recover debt and that some taxpayers have been financially ruined as a result of unfair and harsh action.

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Garnishee Order over a Bank Account - Another method of enforcing a County Court Judgment (CCJ). This third party debt order freezes any positive bank balance to the extent needed to pay the sum owed to you. - Let ’s say that Myco’s bank is HSBC Bank .

If the garnishee (such as a bank or employer) should mistakenly give the money to the account owner or employee, the garnishee could be liable to pay Last week the county tax collector froze his bank account . If something isn’t done within the week, I will be facing eviction again at my new residence.

Inspector-general of taxation Ali Noroozi said the allegations about the ATO's inappropriate use of garnishee notices contained in the Four Corners investigation are "of serious concern".

"If not addressed, [the allegations] can affect community confidence in the administration of the tax system," he said.

"As taxation ombudsman, I have a duty to independently investigate these allegations to restore public confidence."

Garnishee notices are commonly used by the ATO to recover tax debt and can compel a third party such as a bank to transfer funds held by a taxpayer owing the debt to the tax office.

ATO 'cash grab' can have 'devastating effect' on businesses Mr Noroozi's independent investigation comes after claims from current and former ATO officials that the tax office inappropriately used garnishee notices as a "cash grab" in the 2016-17 financial year.

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In extreme cases, it can issues a garnishee on your wages, tax return, income and assets or money held in a bank account . I've filed tax returns up to this year, and the ATO can automatically pre-fill in everything I've earned I had spent the rest because of their money grabbing approach to my super.

Contents. Garnishment is a court process that lets a creditor collect money from a garnishee . Credit union and bank accounts . State tax refunds. A creditor must sue you in court and get a judgment before it can garnish you.

Four Corners also alleged that ATO staff were performance managed based on the levels of debt they collected from taxpayers.

"The ATO has the vital task of collecting Government revenue and recovery of tax debt is an important part of that task," Mr Noroozi said.

"However, it must be done equitably, taking into account the particular circumstances of each taxpayer whilst ensuring a level playing field is maintained."

Mr Noroozi has previously expressed concern about the ATO's debt collection practices and said that it should "have regard for a taxpayer's circumstances and take appropriate action."

In a 2015 report, Mr Noroozi said complaints about the ATO's debt recovery tactics accounted for 20 per cent of all complaints he received and the use of garnishee notices was among the top three issues raised.

"Cash flow is the lifeblood of small businesses and, if inappropriately disrupted, can have an unjustified and devastating effect on them," Mr Noroozi said.

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That said, I wonder what would happen to the money in my bank account if this trusted family member one day found himself indebted to a third party and the third party took legal action in order to be repaid. The same bank sends the tax papers related to another account , to which I have

ATO Garnishee Order . What does it mean? A Garnishee Notice entitles the Australian Tax Office (“ ATO ”) to collect an outstanding tax debt by directly removing monies from an insolvent company’s bank account or directly collecting monies from a company’s debtors.

"My investigation will examine the accuracy of the allegations made, along with themes emerging from complaints to my office, with the aim of finding improvements where necessary and restoring confidence in the system."

Latest probe comes on top of Government inquiry Mr Noroozi's investigation comes after Financial Services Minister Kelly O'Dwyer launched an urgent investigation into the ATO after the joint Four Corners and Fairfax Media investigation.

At the time, Ms O'Dwyer told the ABC she was deeply concerned by the allegations raised in the investigation.

"I have requested a thorough investigation of all allegations raised and the Government will be responding once it has had the opportunity to consider that investigation in detail," she said at the time.

In response to the Four Corners allegations, the ATO said the cases highlighted did not suggest "systemic issues" within the organisation.

The ABC has contacted the Australian Taxation Office for comment.

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