Can the ATO freeze my bank account?

Garnishee versus freeze: what is actually happening

People say "the ATO froze my account" when they log in and cannot get at their money. What has normally happened is one of these:

• A point in time garnishee has taken the balance. The account is open, it is just empty.
• A continuing garnishee is in place, and the bank is sending a percentage of every deposit to the ATO. Some banks place a temporary hold on the account while they work out what to send.
• The bank has put a short administrative hold on the account while it processes the notice. That usually clears within a few business days.

None of these is a freeze in the legal sense. The ATO does not need a court order for a garnishee, which is why it uses them, and it does not use them to lock accounts. The mechanics are on our garnishee notice page.

When the ATO goes to court for a freezing order

The ATO can apply to the Federal Court or a state Supreme Court for a freezing order, sometimes still called a Mareva order. It temporarily stops you, and sometimes third parties, from disposing of assets. The ATO lists it among its firmer actions, but it uses it rarely and only where there is evidence that assets are being moved or sold to defeat the debt: large transfers offshore, property being listed suddenly, funds shifting to relatives.

A freezing order is a court process with a judge, a hearing and lawyers on both sides. It is not something that lands on a small business owner with an overdue BAS and no history of moving assets. If you are that person, what you are looking at is a garnishee, and garnishees are negotiable. Our guide to what the ATO can reach explains the full escalation order so you can see where a freezing order sits in it.

What to do if your account is blocked

1. Call the bank first. Ask whether a garnishee notice has been received, whether it is one-off or continuing, what amount or percentage it names, and whether any hold is temporary.
2. Check your ATO account in myGov or Online services for business for the overdue balance and any notices.
3. Call the ATO on 13 11 42. Explain what the deduction has done to rent, wages or direct debits. A payment plan you can keep usually gets a continuing notice withdrawn or varied.

If you are told a court order is in place rather than a garnishee, that is a different situation and you should get legal advice quickly. The order will name the court and the date, and there will be a hearing you are entitled to attend.

What to do next

1. Ring your bank and ask exactly what has been received: a garnishee notice, a court order, or an internal hold.
2. If it is a garnishee, note whether it is point in time or continuing and what it names.
3. Contact the ATO or get help proposing a plan, because that is what lifts a continuing notice.

More questions: 21 What the ATO can and can't do questions answered · Full guide: Can the ATO take my house?