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Wages paid in advance

Bantubbs

Good Morning,

In September, I paid an employee Annual Leave and Leave Loading in advance trying to assist during some difficult personal times for him as he has used all his quota of personal/annual leave. This employee then continued to have time off - unpaid leave and then suddently and without warning, we received his resignation, effective immediately.

My query is this: how do I recoup the advance wages/leave loading and how do I account for this?

Payment in advance was made during the July-Sept quarter and accounted for in STP/BAS. I have asked the employee to repay the funds advanced to him, but haven't had a response as yet. Once/if I receive his repayment, do I reverse his pay for that week and enter a new one. Of the 37.5 hours and loading I paid him, 25.78 were in advance, so if I do a new entry - do I enter only 11.72 hours and will the tax figure balance out.

I apologise in advance if this is all a bit confusing. Happy to clarify if and where needed.

Thanks

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Tracey_H

Hi @Bantubbs

What I would do is a dummy pay for the hours he was entitled to. So if you hadn't paid the advance this would have been his pay for that period. I'd use the Microsoft snipping tool to create a screenshot of that dummy pay. Don't record the pay, just enter the hours in Process payroll, get the screenshot then cancel the payrun.

You can then open the recorded pay transaction and deduct what he should have been paid from what he was paid, which will give you the amount to recoup. You can do a dummy pay for the advanced hours to check your amounts.

If you did a dummy pay for the advanced hours it would look something like this:

If he repays the amount you would enter the negative pay as the exact opposite of the dummy pay like this:

He would repay the net amount as that was the amount actually paid to him. But the negative pay reduces his gross pay which will update STP and the gross wages amount reported on the BAS. As you're entering the PAYG Withholding figure as a positive, the PAYG liability amount owing will be reduced for the current period's BAS.

Let me know how you go.

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Bantubbs

Thanks very much Tracey, I really appreciate your help.

I'm having trouble getting my head around the dollar figure the employee actually needs to repay. Can I ask you to clarify please: number of advanced hours (25.78) x hourly rate of pay + loading, which becomes the final figure to be repaid? What about the tax I've already paid to the ATO does this figure come into the equation at all (as in do I need to deduct that amount from the final figure??) I just want to ensure I'm attempting to recoup the correct amount.

Apologies; this is a tricky one

(well for me anyway)

Freman

You've probably also remitted super on his/her advance.

If you do recover the advance you can also try and recoup the overpayment of super (Usually more hastle than its worth particularly for tiny amount)

Tracey_H

Hi @Bantubbs

Thanks for your post. I'm sorry to hear that this has happened to you. We're not able to assist with how you can recoup that payment, you may need to get legal advice.

From a software perspective, what is recorded is what happened in real life so you wouldn't make any changes to the recorded transactions. If he does repay the advance you could record a negative pay dated when you receive the repayment. You can then match the negative pay with the bank feed transaction. The negative pay will be included in the BAS for the quarter you received the payment. STP should be updated, run his Summary of payments report and make sure. If STP isn't updated send an update event, wait until it is accepted then recheck that report.

Please let me know if you need further help.

If my response has answered your enquiry please click "Accept as Solution" to assist other users find this information.