The Guides to Social Policy Law is a collection of publications designed to assist decision makers administering social policy law. TheĀ information contained in this publication is intended only as a guide to relevant legislation/policy. The information is accurate as at the date listed at the bottom of the page, but may be subject to change. To discuss individual circumstances please contact Services Australia. Debt recovery by garnishee notice


A debt may be recovered by means of a garnishee notice. A garnishee notice may be issued to any person, third party, or organisation (for example, financial institutions such as banks) that:

  • has money that is due, or will become due, to the debtor
  • holds or may subsequently hold money on behalf of the debtor
  • holds or may subsequently hold money on account of some other person for payment to the debtor, or
  • has authority from some other person to pay the debtor.

Types of payments that can be garnisheed include:

  • financial institution accounts
  • tax refunds/credits
  • rental bond refunds
  • share/debenture dividends, and
  • TAB accounts.

The SSAct requires that a debt either be repaid in full or repaid through deductions from the debtor or another person's social security payment or through payment by instalments under an arrangement negotiated with the debtor. Garnishee action can generally only be pursued if these recovery methods have failed and the debtor refused to enter into a reasonable repayment arrangement, or broke an earlier arrangement to repay their debt.

However, if the delegate determines that these recovery methods are not appropriate in the circumstances of the case, the delegate may proceed straight to garnishee action if the debtor refused to enter into a reasonable repayment arrangement or broke an earlier arrangement to repay their debt.

As of 1 January 2017, actions to recover a social security debt can be commenced at any time. The former 6 year statute of limitations no longer applies (

Act reference: SSAct section 1230C Methods of recovery of debt, section 1233 Garnishee notice, section 1234B No time limit on debt recovery action

Requirement for a notice

Following the decision to recover a debt by garnishee, a notice must be issued to the third party from whom the amounts are to be garnisheed, which may be written or electronically transmitted. An automated instruction sent between one Commonwealth entity and another, such as between Centrelink and the ATO, is sufficient to satisfy the notification requirement.

A copy of the notice must also be issued to the debtor. However, the copy of the notice need not be an exact copy and need not take the same form as the original notification. The copy need only contain enough information to enable the debtor to know that they have been garnisheed and also the amount or percentage by which they have been garnisheed.

Act reference: SSAct section 1233 Garnishee notice

Electronic Transactions Act 1999 section 9(1) Requirement to give information in writing, section 11(3) Integrity of information

When must the payment be made?

The date by which the garnishee payment must be made cannot be before either:

  • the money becomes due, or is held by the garnishee debtor, or
  • before the end of the period of 14 days after the notice is given.

Failure to comply with the garnishee notice will result in a debt for the party who received the garnishee notice. The debt may be recovered from them by legal proceedings, or a further garnishee notice and an interest charge may be applied.

Act reference: SSAct section 1230 Debt from failure to comply with garnishee notice, section 1233 Garnishee notice

Policy reference: SS Guide Interest charge on debts

Effect of bankruptcy on recovery by garnishee

For more information on the effects of bankruptcy on debt, refer to

Garnishee of arrears payment

A payment of arrears of a person's (or another person's) social security payment should not be garnisheed in order to repay a debt. Instead, the arrears payment can be withheld or deducted from the person's (or another person's) social security payment as repayment towards a debt.

Act reference: SSAct section 1231AA Application of sections dealing with deductions

Garnishee of term deposits

Where a garnishee notice is issued to a financial institution against a term deposit, the notice immediately attaches to that account. However, the financial institution is not liable to pay the garnisheed amount until the term deposit matures or is terminated by the debtor. The garnishee notice should be issued before the term deposit matures.

Although there is no restriction in approaching the debtor to discuss early termination of the term deposit, there is no legal requirement for the debtor to agree to do so.

Garnishee of trust funds

The only circumstances in which a garnishee notice should be issued against a trust fund are:

  • where the debtor is owed money by the trust fund, or
  • where the trust fund does not have the true nature of a trust, i.e. a bank account held on trust for another person.

Example: Fitz opens a bank account on trust for Anji (the debtor). Fitz's account can be garnisheed to recover Anji's debt if there are sufficient funds in the account to satisfy full or part repayment of the debt.

It may be difficult to determine whether a trust exists. Such cases should be referred for specific advice.

A garnishee notice should not be issued against a trust fund where the debtor is a beneficiary of the trust, but is not owed money by the fund.

Garnishee of superannuation funds

A garnishee notice should not be issued against a superannuation fund under any circumstances.

Garnishee notices & deceased estates

A garnishee notice should not be served on the executor of a deceased person's estate. While SSAct section 1233 provides that a garnishee notice may be issued against a person who 'holds ā€¦ money for or on account of the debtor', deceased people are not considered debtors, which means that the executor cannot hold 'for or on [their] account'. Instead, the estate becomes the debtor.

To recover a debt from an estate, the debt needs to first be raised against the estate, and notice of the debt sent to the executor. This is not a garnishee notice. If there are sufficient funds in the estate to repay the debt, the debt must be repaid. If there are insufficient funds, then the debt will be permanently written off as irrecoverable.

Act reference: SSAct section 1233 Garnishee notice

Garnishee of joint bank accounts

A garnishee notice cannot be issued against a joint bank account because it is not possible to identify any portion as belonging solely to one owner.

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