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Reversals in Electronic Payment Window & overpayment of wages

hvc1

I have 6 transactions (includes 3 reversals) sitting in the Electronic Payment Register relating to 3 pays for the same employee that I’m not sure how to clear without affecting the bank reconciliations.

Initially I made a mistake when setting up the Salary Sacrifice for one employee. It was set up as a positive rather than negative amount for 3 pays. The wages have been paid electronically to the employee for the incorrect amount. E.G. Salary Sacrifice was added to gross wage instead of being deducted.

So that the amounts would be reported correctly to the ATO, I reversed the incorrect pays and then ran again with the correct amount.

My question is;

How can I clear the electronic payments (they don’t cancel each other out due to the different amounts) without affecting the bank reconciliations?

How do I account for the overpayment of wages? I have read the support notes but I can’t work out how to apply it to this error.

Your help would be much appreciated.

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Accepted answers

Tracey_H

Hi @hvc1

The transactions in the Prepare electronic payments window are the pay transactions, it doesn't matter which order you reverse these in.

Using the pay on the 21/9/22 as an example:

the original pay transaction for $3745.23 matched with the bank feed, leave this as this is the amount actually paid
the reversal for $3745.23, process a positive pay to clear this reversal, make sure you enter all amounts and hours including super and leave accruals
the second pay for $3313.23, reverse this pay
in Prepare electronic payments you'll then have a debit and credit for both amounts, tick all four transactions and click on Bank file to remove the transactions from that window

You'll need to manually check the super and PAYG amounts are correct and adjust if required when processing the pay to fix the overpayment.

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.

All comments

hvc1

Hi Tracey,

Thanks so much for replying to my question.

The super & payg has already been paid for September for the correct amount (the amended pays) - not the overpayments that I reversed.

Would it be best to now to deduct the overpayment from the next pay?

I have not recorded any further transactions as I could not work out how account for the salary sacrifice. There are three pays each with $450 salary sacrifice allocated incorrectly.

Could you please show me an example?

Thank you.

Tracey_H

Hi @hvc1

Thanks for your post. If an employee is overpaid you would typically leave the original pay transaction as is so that you can match what was actually paid with the pay transaction. The adjustment for the overpayment would be processed as a separate pay run or included in the next normal pay run. Which method you choose depends on how the employee repays the overpayment. If they deposit the amount into your bank account you would process a separate negative pay. If it is deducted from subsequent pays you would include it in the normal pay run.

If your employee is not repaying the overpaid amount you would need to reverse the second positive pay and record a positive pay to clear out the reversal. This is because the employee has actually received the higher amount and this is what needs to be reported in STP. You can do a $0 pay and move the salary sacrifice amount from salary sacrifice to a wage payroll category so the amount is reflected as income.

If the employee has/is repaying the overpayment let me know how and what transactions you've recorded and I'll be happy to assist further.

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