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  • Overpayment relates to a previous financial year

    If you overpay a payee in a previous financial year and realise in a later year, you can't recover the amount withheld from the payment from us. If the employee has to repay the overpaid amount, they will need to repay you the gross amount, which will be the overpaid amount received plus any tax amount withheld.

    Example 1 – Overpayment relating to previous financial year

    An employee is normally paid $50,000 salary per year. However, the employee received $70,000, which is an overpayment of $20,000. An amount of $3,000 was withheld from the overpayment amount resulting in the employee receiving $17,000. The employee is required to repay $20,000 to you from after-tax income.

    The employee may need to amend their income tax assessments as a result of the overpayment.

    If two years have elapsed since we issued the payee's notice of assessment, the payee can request an objection to a time limit to amend an assessment.

    End of example

    See also:

    Reporting the overpaid amount

    You should issue an amended payment summary to the employee when you discover an overpayment.

    Include amounts the employee should have received in the relevant financial year. Do not adjust the amount of tax withheld on the amended payment summary.

    If the overpayment occurred in more than one year, issue amended payment summaries for each relevant financial year.

    Amending payment summaries

    You can't change the information on a PAYG (pay as you go) withholding payment summary after you have given it to the payee or provided your PAYG summary statement to us.

    You will need to correct the mistake.

    See also:

      Last modified: 24 Oct 2017QC 16338