Need Help Please, Significant Overpayment from an Employer

PaperplaneXXX on 16/09/2023 - 22:51

Hi all I need help please and opinions.

Story short: current employment 5 years, company not bad, a lot of work but a lot of paid overtime too.
All in all satisfactory.

Recently agreed to new condition of employment with a temporary trial of different working hours with lets say 25% loading. Works better for me.
End of financial year is September according to accounting.

Other colleagues agreed and first month of this arrangement they were paid correctly first month +this incentive pro rata to base salary/month.

I freaked out when I got my salary this month. It was an insane amount.
The payslip followed the next day after bank pay.
So apparently payroll did a mistake and instead of one month of incentive they put THE WHOLE ANNUAL 25% on top of the base. Not as a base pay but as and extra payment.

Not to mention that I paid insane taxes this month! just crazy amount of max taxes.

From my understanding this can not be reversed?
I hope this can be.

I alerted HR next day they say will investigate.

I had this before like 3 years ago but overpay was small like 4500 in total and I remember we agreed to deduct 1500 each month to repay. And at the end the last deduction didn't happen because it was already October. I guess thats how their financial year end set up and payroll. September
No clues anyways….

My main concern here is:
I paid a lot of taxes already to ATO. I doubt they can revert? can they?? I hope! Just cancel the whole payslip.
Otherwise I will get a tax refund only in 2024…

Second problem: if they cant revert this thing, I need to be ready to discuss the repayment plan. Right?
But before December I was going to apply for a pre mortgage approval just in case something comes up in terms of buying a house etc.

Therefore I can't really afford to have repayments of 1-2k per month so my salary would decrease a lot.
Banks will ask and this will look like a penalty.

What do you think a reasonable amount of repayment would be per week basis.
the figure is between 20-30 k overpayment. Really crazy!
I don't know what to think.
Is it a bad luck or a good luck….

any pieces of advice much appreciated.

Education & Work

Comments

  • hasher22 on 16/09/2023 - 23:08
    +5

    No need to freak out, overpayment happens all the time and it's good that you contacted HR as they can legally chase up the money from you.

    1 - When you repay the money, they will adjust the tax withheld, you should be fine next tax time

    2 - No they cannot reverse it through the bank, you have to pay it back manually

    3 - "Therefore I can't really afford to have repayments of 1-2k per month so my salary would decrease a lot." - Can you explain this? I don't understand how you cannot afford 1-2k per month when you already got the money as a lump sum? Did you spend the money? That's why you're asking for repayments installments?

    When HR state you owe X amount, pay the whole lump sum back, no need for a repayment plan. This will fix your problem of banks seeing a repayment plan.

    • PaperplaneXXX on 16/09/2023 - 23:18

       Thanks I meant that I don't want deductions in my further pays…
      for good looking payslips.

      Previously they overpaid and deducted 1500 per month which was visible.

      • hasher22 on 16/09/2023 - 23:23
        +2

        To fix all your issues, when HR gets back to you on an amount, pay it back in full and there will be no pay slip or bank statement issues.

        If the bank questions this payslip and the large sum outgoing from your account (highly doubt they will, unless you get some rep who likes to look at everything, and even then this payback isn't (well shouldn't) going affect your application), then you know the answer.

      • Protractor on 17/09/2023 - 09:14

        Either your HR are incompetent serial offenders or you work at PWC

  • Summoner on 16/09/2023 - 23:11
    +1

    It is very easy to correct the overpayment if you agree to repay the overpayment. Nothing to worry about.

  • capslock janitor on 16/09/2023 - 23:37
    +2

    Story shorter:

    The author has worked at their current job for five years and recently agreed to new working hours with a 25% pay increase. However, a payroll error resulted in them being overpaid. They are worried about the tax implications and await HR's investigation. If the overpayment cannot be fixed, they are concerned about how it might affect their mortgage application and seek advice on a reasonable repayment plan for an overpayment of 20-30k AUD.

    • PaperplaneXXX on 17/09/2023 - 08:36

      thanks for that. I shall have used chat GPT too for a short brief.

  • GrueHunter on 16/09/2023 - 23:58
    +1

    The thing stopping you from just giving back the extra money sitting in your account in one go is…what, exactly?

    • PaperplaneXXX on 17/09/2023 - 08:37

      I don't understand this point . I cant give the money back but who is going to give the taxes back?
      ATO???

      • Sinnerator on 17/09/2023 - 09:06
        +1

        Your employer should adjust the tax taken out of your next x amount of pays to reflect this, any accountants here correct me if I am wrong (otherwise wait until tax time).
        Personally, I would've bought some w@nk coin with the overpayment and just waited….. and waited.

  • Downvoter on 17/09/2023 - 07:33

    Just give it all straight back.

    • PaperplaneXXX on 17/09/2023 - 08:38

      I hope there is that option on the the table.

      I also E mailed my accountant.
      As this is also a TAX implication hope she will be able to sort this out with my HR

      • Zeph101 on 17/09/2023 - 19:29
        +1

        If the money is repaid and the pay is sorted out to be what it should be, there won't be any implications.

        Businesses have to send pay data to the ATO every pay but they can also send the adjustment as well.

        Won't be any tax implications if the overpayment is repaid

  • deme on 17/09/2023 - 08:39
    -1

    What did your union say?

  • brendanm on 17/09/2023 - 09:07
    +1

    Why would you need a repayment plan? Simply return the entire overpayment amount after discussing it with your employer.

  • Protractor on 17/09/2023 - 09:13
    +2

    This is HRs problem. You are over thinking it. Follow their lead, get it all in writing( that it was their fault) work out a workable solution (to suit you) and if there's tax implications let the employer sort as much as possible, advocate for you, and you pick up the crumbs and finish it off if and as required.

    I also E mailed my accountant.As this is also a TAX implication hope she will be able to sort this out with my HR
    Yes. Thread closed?

  • Malik Nasser on 17/09/2023 - 10:05
    +1

    Just put it in a high interest savings account while waiting for HR to sort out their own mess.
    Don't spend it, cause you will likely need to pay it back.
    Who knows how long it will take HR to sort out. In the mean time make to most of the 'free loan' and let it earn interest for you.

    • PaperplaneXXX on 17/09/2023 - 11:35

      good point btw! free loan it is…
      have not spent any.

  • deme on 17/09/2023 - 12:42
    +1

    OP you can edit tax returns.

    https://www.austpayroll.com.au/payroll-overpayment/

    “The employee would repay the gross amount, and the pay office needs to adjust the details in payroll for that financial year and reissue the income statement,” she says. “The employee then needs to resubmit their tax return to recoup the tax portion of the overpayment.”

    You can edit Tax returns up to 2 years https://www.ato.gov.au/individuals/your-tax-return/Amend-you… (longer if the Tax Commissioner approves)

    • PaperplaneXXX on 17/09/2023 - 13:50

      good news for me then

      • deme on 17/09/2023 - 18:44
        +1

        btw, if you are confused the ATO is actually helpful if you call them.

        In any case, you should be no worse off than if you were correctly paid.

  • dtc on 17/09/2023 - 14:04
    +2

    When they pay you they will pay (say) $30k and then deduct $10k in tax. You get $20k and the ATO gets $10k. You don’t pay any extra tax.

    When they reverse it, you pay back $20k and the employer then claims back the $10k from the ATO.

    If the business doesn’t claim tax back from the ATO then it’s recorded as you having paid the tax. That’s great for you, you have paid extra tax and get the benefit at the end of the year (you won’t though in practice, but in theory). So not really sure why you are stressing about the tax issue

    Your tax at the end of the year is based on the amount you have actually been paid. The only issue will be if you pay back the $20k but it’s still recorded as being paid to you. Otherwise there is nothing to worry about

  • try2bhelpful on 17/09/2023 - 19:37

    I had something similar happen. They stuffed up my pay when I came back from unpaid leave and paid me the time I was off. Yes they will be able to sort this out with the tax office and there may also be Superannuation implications. Work with HR on this and ensure you quarantine off the overpayment to hand it back. It is a PITA but they should be able to manage it for you. The advantage is you’ve been honest up front.

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