We processed deductions from employees who had been overpaid due to a software issue across a number of pay runs.
To recover the overpayments, we set up the deductions as Other/None deductions in Xero payroll, with the effect that both PAYG withholding and SGC were reduced in line with the deduction.
As a result, these amounts are now appearing under Salary Sacrifice – Other employee benefits (Type O) in our EOFY STP finalisation.
While the payroll treatment is correct from a PAYG and superannuation perspective, Salary Sacrifice – Other employee benefits is not an accurate description of the underlying transaction, as these amounts represent repayments of salary overpayments rather than salary sacrifice arrangements.
Can you please confirm whether it is acceptable for these amounts to be reported at this STP item, or whether they should instead be reported differently?
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