Where the ATO serves a garnishee notice, it is able to take priority over other creditors who have registered mortgages over a property being sold.
This is the decision of the Full Court of the Federal Court of Australia in Commissioner of Taxation v Park  FCAFC 122.
The importance of this case cannot be understated and was clearly acknowledged by the Commissioner whose counsel informed the court that:
“Because of the importance of the case his client had agreed to pay the costs of the proceeding.”
The garnishee notice is able to take priority over those creditors who have security in the form of registered mortgage by operation of s260-5 Taxation Administration Act 1953 (Cth).
The Court adopted a construction which meant that the instant that the money became owing by the purchasers to the Debtor, those purchasers fell under the statutory obligation to pay those moneys to the Commissioner.
For the purchasers this meant payment of the amount of the debt detailed on the garnishee notice to the Commissioner satisfied that portion of their obligation under the contract.
The ATO have many powerful weapons to extract payment from debtors such as these garnishee notices.
Irish Bentley Lawyers are able to advise on when debts are properly owing and have been properly assessed and shield you from excessive taxation.