The Supreme Court of Queensland has held that a garnishee notice issued under s 260-5 of the TAA in respect of a debt owed by a third party to a taxpayer, does not give the Commissioner a proprietary interest in the debt.
Instead, the Court found that the Commissioner has a statutory charge over the debt while it continues to exist. As a result, in this case, where part of the debt subject to the s 260-5 notice was paid into court by the debtor (in the light of competing claims to the moneys by various parties), the Commissioner could not claim any entitlement to it as the effect of the payment was to extinguish the debt owed by the debtor to the taxpayer.
In short, the Court held that “in the particular circumstances of this payment into court, the Commissioner has no entitlement to the funds. Because he had no proprietary interest in the debt, he cannot claim a proprietary entitlement to what was paid in part discharge of the debt, unless the statute so provides [and in this case it] does not so provide, expressly or by implication”.
(Hansen Yuncken Pty Ltd v Ian James Ericson trading as Flea’s Concreting & Anor [2012] QSC 51, Supreme Court of Queensland, McMurdo J, 14 March 2012.)
[LTN 61, 29/3]