Can the ATO garnish my wages, and how much?

How a wage garnishee works

An employer garnishee is a continuing notice. The ATO writes to your employer, marked private and confidential, naming you, the debt and the percentage to deduct. From the next pay run your employer takes that percentage of your net pay, after tax, and pays it to the ATO. It keeps doing so every pay until the debt is paid in full or the ATO varies or withdraws the notice.

The ATO's garnishee policy says it will not usually seek more than 30 cents in the dollar of salary and wages. It can go higher if you have other income or your financial position warrants it, and lower if your pay is already subject to another deduction such as child support. Employers are not allowed to refuse. An employer that ignores a notice becomes liable for the amount itself.

The ATO already knows who your employer is. Single Touch Payroll reports your wages to it every pay cycle, so there is no detective work involved.

How much of your pay is left

Unlike a court ordered wage garnishee, there is no fixed protected earnings amount written into the tax law. The 30% figure is policy, and the ATO's stated aim is to leave you enough to live on. If 30% leaves you unable to pay rent, food or medical costs, tell the ATO and ask for the percentage to be reduced. It has the discretion to vary the notice and does use it.

A wage garnishee sits on the same rung as a bank garnishee in the ATO's escalation ladder, which our guide to what the ATO can reach sets out in order. It is a money tool, aimed at income, and it is reversible.

How to get it lifted or reduced

1. Propose a payment plan. The ATO says it may withdraw or vary a garnishee if you make suitable alternative payment arrangements. A plan that pays roughly what the garnishee was collecting is likely to be accepted; one that pays much less will need a reason.
2. Ask for a lower percentage. Bring a simple budget showing essential costs. The ATO can reduce the deduction without withdrawing the notice.
3. Check the debt. If part of it comes from a default assessment or an unlodged return, lodging the real figures can cut the debt and shorten the notice.

Ignoring it does not work. The notice stays until the debt is paid, and interest keeps accruing on whatever is left. Our page on whether a payment plan can stop a garnishee explains what the ATO looks for in a proposal.

What to do next

1. Ask payroll for a copy of the notice and confirm the percentage and the debt it relates to.
2. Work out a weekly budget showing what 30% leaves you with, so you can ask for a reduction if it is not enough to live on.
3. Call the ATO on 13 11 42, or get help doing it, with a payment plan proposal before the next pay run.

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