If the transaction qualified for the ebay money guarantee than you have to refund the whole amount. But if your rules are the same on the Australian site as they are here on the US site the buyer only has 30 days after the estimated delivery date to open a claim. If it has been longer than that you have leeway on how you want to handle it as ebay will not step in.
Before you do anything, you might want to post on the Australian board to see what the rules are there.
https://community.ebay.com.au/t5/Selling/bd-p/2500000010
