Treasury has issued a consultation paper Tackling fraud and financial abuse which includes proposals for new Australian Taxation Office (ATO) powers to help the ATO to issue garnishee notices to collect tax debts from jointly-held assets, with safeguards.

The Government intends to expand the existing ATO garnishee powers to jointly held assets where those arrangements are being used to frustrate recovery action.

Currently the ATO is generally unable to use garnishee notices to recover relevant funds from jointly held assets, including jointly held bank accounts.

The Commissioner would be permitted to presume that the taxpayer has an interest in the joint asset that is equal to the interest of other individual asset holders. For example, if there are three asset holders, then the taxpayer’s interest would be presumed to be a third of the total asset.

The ATO would be required to make reasonable attempts to notify other joint owners of the Commissioner’s intention to issue a notice, and provide the opportunity to lodge an objection to the assumed equal split of interests.

Alternatively the ATO could freeze a set amount within a joint account, but not remove any funds, prior to notifying any account holder and without applying to a court.

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Author: David Jacobson
Principal, Bright Corporate Law
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The information contained in this article is not legal advice. It is not to be relied upon as a full statement of the law. You should seek professional advice for your specific needs and circumstances before acting or relying on any of the content.