There is a time limit applied to the recovery of debts under this provision.
Policy reference: FA Guide 7.2.1 Debt Recovery - General Provisions
A garnishee notice may be issued to any person who:
This applies to an amount regardless of any law of a state or territory under which the amount may be inalienable. If money is to be paid to the debtor only if a condition is met, then the money is taken to be due on demand even if the condition is not met.
Example: A garnishee notice can be issued to a person's employer, bank or solicitor.
A copy of the garnishee notice must be given to the debtor.
The person who has been issued with a garnishee notice becomes a garnishee debtor (1.1.G.10).
Act reference: FA(Admin)Act section 89 Garnishee notice
The notice requires the garnishee debtor to pay:
The date by which payment must be made is specified in the notice. This date cannot be before either:
A person cannot refuse or fail to comply with a garnishee notice to the extent to which they are capable of complying with the notice. The penalty for failure to do so is 12 months imprisonment.
If the garnishee debtor fails to comply with the notice, the amount of the debt outstanding is recoverable from the garnishee debtor by means of:
The amount outstanding is the lesser of the amount the:
If an amount is recovered from either the original debtor or the garnishee debtor, the amount reduces the balance of both debts.
Act reference: FA(Admin)Act section 80 Debt from failure to comply with garnishee notice, section 89 Garnishee notice
Payments made by a garnishee debtor are taken to have been made with the authority of the original debtor.
When the debtor or anyone on their behalf makes a payment, the garnishee debtor must be notified that the debt has been reduced by the amount paid.
Where a garnishee notice is issued to a financial institution against a term deposit, the notice immediately attaches to that account. However, the financial institution is not liable to pay the garnisheed amount to the FAO until the term deposit matures or is terminated by the recipient. Although the FAO is not restricted from approaching the recipient to discuss early termination of the term deposit, there is no legislative authority to request the recipient to do so.
The only circumstances in which a garnishee notice may be issued against a trust fund are when the:
A garnishee notice should not be issued against a trust fund:
A garnishee notice should not be issued against a superannuation fund under any circumstances.
Under no circumstances should a garnishee notice be served on the executor of the estate of a deceased recipient.
Under section 89 of the A New Tax System (Family Assistance) (Administration) Act 1999 a garnishee notice may be issued against a person who 'holds ... money for or on account of the debtor'. An executor cannot be said to hold an estate 'for or on account' of the deceased person and therefore a garnishee notice must not be issued under section 89 in these circumstances.
A garnishee notice cannot be issued once a debtor has become bankrupt because the debt is no longer a 'debt due to the Commonwealth' for the purposes of the Social Security Act 1991.
The Commonwealth can rely on a garnishee notice issued prior to bankruptcy, but only where the debt was due before the bankruptcy commenced. In cases where the garnishee notice was issued prior to bankruptcy but was not complied with before the funds were vested in the trustee, specific advice should be sought.
Policy reference: FA Guide 7.2.8 Effect of Bankruptcy on Debt Recovery
Last reviewed: 30 April 2012