Staff to be liable for tax on overpayments if the funds are not recovered.
Queensland Health can't wipe out the debts of employees it overpaid because of tax reasons, Premier Anna Bligh says.
The government needs to recoup $62 million from 38,000 workers who have been overpaid since a faulty payroll system was introduced last year.
Many are contesting the amounts the government says it is owed - an average of between $1100 and $1500 - and that anger has led to a moratorium on paying back the cash.
Some health workers want the government to wipe the debts rather than spend more chasing the overpayments.
But Bligh said that could not happen.
"There are complex issues involved with that," she told reporters on Monday.
"To do that would mean that those funds would then become part of the income of those staff and they would then be liable for tax on it."
She said the government had an arrangement with the tax office that overpayments would not be included in workers' taxable income for 2010/11.
"For some people that would mean very little, for others it could mean that it put them, for example, into a different tax bracket and that would affect a whole lot of other things in their lives," she said.
The premier said she was still unhappy with the system, despite it having stabilised.
"Does more work need to be done? Yes of course it does," she said.
"And that is why the government is investing in the improvements that are being made and there's more to come."
The Queensland Nurses Union has said thousands of nurses are still being wrongly paid.
The payroll system is costing $219 million to fix.
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