How Can I Recover An Overpayment Of Compulsory Super?

If you've accidentally overpaid an employee's superannuation, don't worry — there are two legitimate ways to handle it depending on your situation. This guide explains your options, legal references, and what to avoid to stay compliant with Australian tax and super laws.

Option 1: Treat It as a Pre-Payment of Future SG

Under Section 23(7) of the Superannuation Guarantee (Administration) Act 1992, an employer may treat a super contribution as a pre-payment, as long as the following conditions are met:

• The employee is still employed and earning ordinary time earnings (OTE).
• The overpayment is applied to future super guarantee (SG) obligations within the next 12 months.
• You document your intent to treat it as a pre-payment — not a mistake.
• You maintain detailed records showing when the overpayment occurred and how it was applied to future pay periods.

This allows you to reduce SG contributions in future pay runs until the overpaid amount is "used up", as long as the correct SG is attributed to each future OTE payment.

Important:

If you said or documented that the overpayment was accidental — for example, in an email to your payroll software or accountant — you may not be able to use the pre-payment option without issuing a written correction that redefines your intent.

Option 2: Request a Refund from the Super Fund

If you cannot or prefer not to treat the overpayment as a pre-payment, you can request a refund under APRA Prudential Practice Guide SPG 270 (sections 24–36). To do this:

• Contact the super fund and explain the situation as a “contribution in error”.
• Be prepared to provide supporting documents, such as payroll records and the payment date.
• Processing times vary, but it commonly takes up to 3 months to receive the refund.

What You Cannot Do

• Do not underpay SG in a future pay run to “balance out” an earlier overpayment without treating it as a pre-payment.
• Do not assume that STP reporting YTD totals are enough to justify underpaying per pay period — SG must match each pay's OTE.
• Do not apply an overpayment to a past shortfall — only future SG obligations qualify under s23(7).

ATO Guidance and Community Advice

The ATO has acknowledged both methods above as legitimate. For a helpful summary and discussion from an ATO community representative, visit:

ATO Community: Super contribution in error (ATO link)

Still Unsure?

Speak with your accountant, contact your super fund, or reach out to the ATO to confirm your best course of action.

This article is general guidance only and does not constitute financial or legal advice. Always check current laws or consult a qualified advisor.