Institute of Certified Bookkeepers
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August 2013 - New Client and Payroll categories setup to incorrectly attract Super Guarantee - what do you do

  • Fellow in Practice
  • Practice Certificate
  • 266 posts
  • # 93432

You have just taken over a new client and upon checking the file discover that there are several pay categories that have been set to incorrectly attract super guarantee (ie overtime and some allowance categories). You alert the client to the overpayment of super, and she wants to short pay the next month’s super to balance the amount overpaid.

Is this allowed? How should you advise the client in this situation?

What do you do?

  • Fellow in Practice
  • Practice Certificate
  • 266 posts
  • # 93856

ICB's Response:

You cannot short pay this quarter for an overpayment in another quarter. This would be deemed to be not meeting your superannuation obligations for this quarter. You will still need to pay the obligations in full for the current period.

You can contact the superannuation funds in writing to request a refund. In this case, you need to detail the employee name, period of work, amount paid originally, amount that should have been paid, the difference you want refunded, and the reason for the overpayment. It is then up to each super fund as to whether they refund the mistaken payment or not. They can choose NOT to refund, on the basis that the super fund is not currently authorised to repay a mistaken superannuation payments. On the other hand, if they are satisfied it was truly a mistaken payment, they can issue a refund. It is entirely up to the superfund’s discretion. Generally speaking, if it is proved that there was a genuine mistaken overpayment, the super funds will issue refunds, but it may take some time to process.

If a large amount of mistaken payment was involved and the superfund decided not to refund, the business owner can take the matter to court. Courts ruling on this kind of situation previously have said that the principal of “unjust enrichment” of the employee applied, and therefore the amount should be refunded. There have also been rulings related to what is deemed “fair and reasonable” and in this situation, the court may decide that the super fund refusing a refund for a genuine mistaken overpayment is not being fair and reasonable.

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