My employer claims he didn't deduct tax from my pay and is now asking me to reimburse him the tax amount he claims is applicable. He is withholding pay from me until I do as he is asked.
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Is there a payslip?
Generally, (Gross wages) - (PAYG withholding, this amount is supposed to go to ATO) = (Net Wages, what you receive from employer)
Hi @EWKG3974,
If you were paid your gross wages with no tax withheld, you were effectively overpaid net wages. Your employer can withhold additional tax from future salary payments to correct the earlier error.
That said, there are limits:
- An employer can’t demand a lump‑sum ‘repayment’ outside payroll and label it as PAYG.
- Any catch‑up must be handled through payroll, reflected in payslips and STP.
Your employer is still responsible for meeting their PAYG withholding obligation. It’s correcting PAYG withholding across pay periods, which the PAYG system allows.
Whether an employer can withhold an entire pay or make large deductions at once is a workplace law issue, not a tax one. As suggested by @YellowPotato and @BroncosvRabbits, start by checking your payslip.
Hi @EWKG3974,
This would be a great question to ask the Fair Work Ombudsman.
It could be considered as an Overpayment, and as @YellowPotato originally pointed out, it would be a great idea to check your pay slips to see what they say.
Whether or not they state you were paid Gross or Net wages and if it states any tax withheld on them. 👌
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