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Garnishee arrangement instead of payment plan: Company not wound up

The ATO commenced debt recovery action and would not accept a payment plan.  However Waterhouse Lawyer negotiated a Garnishee arrangement so that the company could continue trading and not be wound up.  83 jobs were saved.

In this case, the ATO had issued a Statutory Demand against the taxpayer for a tax debt of over $600,000.  Payment was required within 21 days.

As a result of a restructure three months before, profit forecasts were excellent and the taxpayer believed it could repay the taxation debt within two years. However, the ATO rejected all offers of a payment plan because neither the company nor its director had any property that could secure the payment plan.

In desperation the director contacted Waterhouse Lawyers.  By agreement with all parties, a garnishee was put in place against the director.

Under the garnishee arrangement, the ATO garnisheed the Director (with their full consent) for a weekly payment of $5,000 to be garnisheed on a set day each week.  In turn, the Company loans $5,000 to the Director.  The Director repays the loan by paying the garnisheed amount to the ATO.

A word of caution:  if the taxpayer defaults on the garnishee arrangement the ATO will immediately commence debt recovery action.

 

Category: News, Tax