Can a payment plan stop a garnishee?

What "suitable arrangements" means in practice

The ATO issued the notice because it did not believe it would be paid otherwise. To lift it, the ATO needs a reason to believe the opposite. The things that usually matter are:

• All lodgements up to date. The ATO will rarely negotiate over a debt it cannot see in full. Unlodged BAS or returns are the first thing to fix. See payment plans with unlodged returns.
• A plan you can actually keep. A shorter plan with a realistic monthly amount beats a long one that will fail. The ATO looks at capacity to pay, and it knows the amounts already garnished were affordable in the sense that the money was there.
• An upfront payment. Not compulsory, but a lump sum at the start is often what tips the ATO towards withdrawing rather than just varying the notice.
• History. If you have defaulted on plans before, especially twice in 12 months, the ATO may keep the notice in place as security while the plan runs. Read what happens after two defaults.

How to ask for the notice to be withdrawn

1. Call the ATO on 13 11 42 (or have your tax agent call). Have your copy of the notice, your current balance and a proposed monthly figure ready.
2. Propose the payment plan and, in the same call, ask for the garnishee to be withdrawn, or at least varied to a lower percentage, once the first payment is made.
3. Ask for written confirmation of both the plan and the withdrawal. Phone agreements are real, but a letter in your online services inbox is what you show the bank or your employer.
4. Check with the bank or employer a few days later that they have received the withdrawal. Third parties keep acting on a notice until they are told it has been withdrawn.

If the debt is over $200,000 you cannot set the plan up online and will be negotiating by phone or through an adviser anyway. See plans over $200,000.

When a plan will not be enough

The ATO can keep a notice in place even with a plan running. That happens more often when:

• the debt is large relative to what the plan repays each month;
• the ATO believes there is a risk to revenue, for example a business winding down, assets being sold, or a director with a history of companies that failed owing tax;
• the notice is a continuing employer notice that is already collecting at a rate the ATO is happy with; or
• the plan proposed is the third or fourth attempt after earlier ones defaulted.

In those cases the practical question is whether the business can survive with the garnishee in place while paying the plan. If it cannot, the conversation moves from payment plans to rescue options such as small business restructuring, which does stop enforcement once a practitioner is appointed. That is a decision to make with advice, not on the phone to the ATO at 4pm on a Friday.

What to do next

1. Lodge anything outstanding so the ATO can see the full debt before you call.
2. Call 13 11 42 with a monthly figure you can keep, propose the plan and ask in the same call for the garnishee to be withdrawn.
3. Get the withdrawal in writing and confirm the bank or employer has received it.

More questions: 8 Garnishee notice questions questions answered · Full guide: Garnishee notices