Recently I have been overpaid.
What I was paid
Gross = 2254.27
Net = 1800.27
what I should have been paid
Gross = 2232.72
Net = 1786.72
The payroll wants to recover (gross 2254.27 - 2232.72) = $21.55
Shouldn't they recover the net different ($13.55)
Thanks OZB team. I called ATO to discuss this matter and it turned out that you guys were right about the thing as it is a normal to deduct a difference from gross pay.
Not yet.
They said to ask OzB first. 😉
True story.
they will probably just do gross so you can do your own tax (which affects the net)
They should be recovering the Gross amount. Whatever was overpaid in tax will be returned to in your next tax return.
That sounds good. I was about to send them an email about why they should have calc'd net figure difference but your comment is making sense to me.
Yep, they paid the gross to you, just some was withheld as tax.
While a little unfair, they would recover the gross, as whatever wasn't paid to you has already been paid via PAYG (so the business doesn't have it either). This would then be an overpayment of tax which you get back in your tax return.
Are you paid weekly, fortnightly or monthly? Just have them recover the gross from the next pay period.
Fortnightly
They should be recovering the net amount. Imagine if they'd accidentally overpaid you $100,000 and $45,000 had been taken out for tax. They couldn't demand you use $45,000 of your own money to cover their mistake even if you will get it back when you do your tax return. The same principle applies no matter the amount.
Having said that, it will probably be real pain to reverse everything so you'll have to decide how much you really want to fight over $8 which you will end up getting in the end anyway.
Lol, beat me.
They should be
Yes they definitely should, and if the amount was as big as $45,000 worth of tax, OP should certainly push the point. But for $8? The practical difficulties of trying to recover a PAYG overpayment from the ATO now make it a non-starter.
So there is a second way to deal with this situation? I didn't know that. Probably the payroll guys are too lazy to contact ATO for PAYG overpayment recovery.
Theoretically there is, yes. But for the amount of $8? No - it's so impractical your boss will almost certainly save time just hanging out on a street corner hat in hand instead.
@HighAndDry: obviously not for 8 bucks. Lol
But these payroll guys make mistales every now and then. Initially they figured out the gross pay difference of $60.xx when i recalculated my pay of that period i figured out the gross difference was only 22.55 so i asked them to send me a new letter for deduction.
Ah, that's right. It's all changed since 1st July. Whereas previously they would've just gotten a lump sum and reconciled it at the EOFY, now detailed payroll figures get reported more frequently.
The same principle applies no matter the amount.
No it shouldn't, there are costs involved with trying to recover a PAYG overpayment. Those costs are worth it when the overpayment is $100,000, but the costs are not for a $20 overpayment.
As much as it is noble to say that the same principle should always apply, that's just not the case in the real world. Decisions are made based on the benefits and costs. For example, you might spend hours at a store, on the phone to consumer affairs and seeing a lawyer if your $100,000 product stopped working, but you wouldn't for a $20 product. It's the same idea.
For me, the most logical solution would be to take the gross amount off the next pay cycle, so basically all that happens is that you were paid a small amount early. Either way, OP is not losing $8, it will just be moved to the tax return. It shouldn't be a concern.
I'm not sure why they couldn't just do an adjustment in their system to allow the net amount to be returned, but at the end of the day it's probably not worth arguing over $8 on a one off occasion.
They can do an adjustment on his next pay with his tax withheld so it makes up for this pay cycle.
If an overpayment is identified in the same financial year as it is paid the employee will only need to repay the net amount of the overpayment, that is the amount actually received by the employee in addition to what they should have received. The employee should repay the net overpaid amount from after-tax income.
As the employer, you need to adjust the PAYG amount to be remitted to the ATO accordingly.
Do not include details of the overpayment on the employee’s payment summary.
The overpaid amount may be repaid in the same financial year or a subsequent financial year.
They will just make pre-tax deduction for overpaid amount (gross) and the tax will be recalculated automatically by software. If you add two fortnights' PAYE tax amounts and divide by 2 there should be no material difference against your normal fortnightly tax.
it turned out that you guys were right
Of course we were right.
Have you ask the payroll? What did they say?