Recover an Overpayment

!PLEASE CONTACT YOUR ACCOUNTANT OR BOOKKEEPER FOR GUIDANCE BEFORE COMPLETING ANY OF THE BELOW
e-PayDay® Payroll Support Personnel are not registered Taxation or BAS agents (members of the Tax Practitioners Board (TPB)) and, therefore, cannot provide payroll advice. We can assist you in using the software to obtain the desired outcome based on guidance provided by your Accountant or other qualified 3rd parties.

!If an overpayment is identified in the same financial year it is paid, the employee will only need to repay the net amount of the overpaid amount. The net amount is the amount received by the payee. You will require written consent from the Employee to deduct an overpayment from their pay. Read Overpayment identified in the same financial year on the ATO’s website.

1. Process an out-of-cycle Pay Run to calculate the NET overpayment
2. Depending on the advice obtained,
   • Add an Overpayment Deduction and assign to the Employee
   • Add an Loan Repayment Deduction and assign to the Employee
   • Add a Debt Waiver Fringe Benefit for the relevant Employee.

!If an overpayment is identified in a different financial year it is paid, the employee will need to repay the Gross amount of the overpaid amount. The Gross amount is the amount calciauted for the Employee before PAYGW is deducted. You will require written consent from the Employee to deduct an overpayment from their pay. Read Overpayment relates to a previous financial year on the ATO’s website.

1. If you have decided to recover the overpayment
   1. Add an Overpayment Deduction and assign to the Employee
   2. Contact e-PayDay Support for assistance with opening the relevant archive to amend the employee’s YTD Taxation Balances and send an amended EOFY Submission.
2. If you have decided you are not going to recover the overpayment,
   1. Add a Debt Waiver Fringe Benefit
   2. Contact e-PayDay Support for assistance with opening the relevant archive to amend the employee’s YTD Taxation Balances and send an amended EOFY Submission.

*TD 2008/9 – Income tax: are amounts mistakenly paid as salary or wages to employees (or as income support payments or worker’s compensation amounts to persons),to which they are not beneficially entitled, but are obliged to repay, ‘ordinary income’ under section 6-5 of the Income Tax Assessment Act 1997?

TD 2008/10 – Fringe benefits tax: where an employer recognises they mistakenly paid to their employee an amount that the employee is not legally entitled to, but is obliged to repay, and afterwards allows the employee time to repay the amount, is there a ‘loan benefit’ under subsection 16(1) of the Fringe Benefits Tax Assessment Act 1986?

TD 2008/11 – Fringe benefits tax: where an employer mistakenly pays to their employee an amount that the employee is not legally entitled to, but is obliged to repay, does the employer’s subsequent waiver of that obligation constitute a ‘debt waiver benefit’ under section 14 of the Fringe Benefits Tax Assessment Act 1986?