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ATO looking to garnishee super savings

The Australian Taxation Office is turning to issuing garnishee notices on individuals’ superannuation savings as a means of recovering money owed to it and has already made an unsuccessful attempt to do so.

“You might be wondering if the commissioner of taxation can garnishee superannuation savings and he’s trying. The truth is he’s having a go,” Perpetual head of strategic advice Chris Balalovski warned.

“A recent Federal Court decision in 2013 ruled that he failed on his garnishee notice on superannuation savings in the superannuation fund only on a technicality.”

Retirement savings currently remain well protected against creditors in many circumstances, including severe ones such as an individual being declared bankrupt. However, this recent development has led Balalovski to speculate if the first weakness of the protective mechanisms in place is now beginning to appear.

“It’s important to note that the commissioner himself issued a practice statement in 2011,” he said.

“In it he says: ‘A garnishee notice in relation to any tax-related liabilities may be served on a super fund, but it won’t be effective until the debtor or member of the fund’s benefits are payable under the rules of the fund.’

“So it would have been the case where the member had satisfied a condition of release, they were retired or over the age of 65, they’ve left the funds in the superannuation environment, the commissioner has issued the garnishee notice to grab the money, but failed on a mere technicality.”

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