Can the ATO put a caveat on my property?

Why a debt alone is not enough

A caveat is a notice on a land title saying someone claims an interest in the property. Lodging one without a genuine interest is improper and can be removed with costs. An unsecured creditor, and that includes the ATO for an ordinary tax debt, has a right to be paid, not a right in your land. So the ATO does not lodge caveats the day a bill goes overdue, and a search of your title will usually show nothing from the ATO at all.

What the ATO does instead is watch the money. If you sell, it can serve a garnishee notice on the purchaser or the settlement agent so that sale proceeds go to the debt before they reach you. That is often more effective than a caveat and needs no court.

How the ATO can get onto a title

• Judgment, then a charge or writ. Once the ATO has a court judgment, it can register that judgment against your land, or obtain a writ or charging order, depending on the state. The property cannot then be sold or refinanced without the debt being dealt with at settlement.
• Freezing order. If the ATO can show a court that you are likely to dispose of assets to avoid paying, it can seek an order freezing them, in Australia or overseas. This is aimed at people moving money, not people who are struggling.
• Security you agree to. As part of a large payment arrangement, the revocation of a departure prohibition order or a release from a garnishee, the ATO may ask for a mortgage or charge over property. Then it has a real interest and can register it.
• Bankruptcy. If a trustee is appointed, your interest in the property vests in the trustee, who registers that on the title. This is the route by which homes are actually sold, and it comes only after a judgment, a bankruptcy notice and a court hearing.

Selling or refinancing with a tax debt

Because the ATO rarely sits on the title, nothing legally stops you selling or refinancing while you owe tax. Two practical things do get in the way. Lenders ask about ATO debt and many decline or price it in; ATO debt and your home loan covers who will lend. And if enforcement has started, a garnishee on the sale proceeds can arrive at settlement. Many people refinance specifically to clear the debt, which lenders view very differently from refinancing while hiding it; see refinancing to pay ATO debt.

What to do next

1. Order a title search if you are worried; it will show any judgment, writ, charge or caveat that actually exists rather than the one you fear.
2. If you plan to sell or refinance, tell your broker or conveyancer about the debt early so a garnishee at settlement is not a surprise.
3. If the ATO has asked for security over property as part of an arrangement, get advice on the terms before you sign.

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