Death of Employee
Unfortunatly, one of our employees died suddenly. He is owed a sizable amount of Annual Leave and LSL. I believe I cannot pay this out until after probate on his estate, is this correct? Also, are...
Forum Discussion
Hello,
I did pretty much the same thing however I still processed all outstanding leave through the deceased employee's payroll account, but paid out the money to the next of kin's bank account.
At the time, I checked this info with the ATO and looked up a page they recommended to help: type in QC27088 and it will take you to info on deceased employees. Initially, I had asked different accountants how to deal with it, one thought you had to still take out tax, so check your facts because this is not the case. As you said, no tax or super but upon looking into this further, it is just a non-reportable wage payment because of the death. I had originally put it in as an ETP death benefit, but upon advice from a professional bookkeeping body, learnt it is not an ETP. You do need to set up a new wages/ payroll category, something that lets people know it is unused leave upon death, but importantly, you assign it as Not Reportable.
Unfortunately, I did it wrong at first (assigning it as an ETP Death benefit payment) so I had to go back and reverse the original pay I processed, and re-enter it under a newly named wages category that was assigned as Not Reportable. So, I ended up naming it:
Unused Leave NR_Death-(Name of Employee). (There’s not a lot of room for long names in the categories fields!)
Looking at my STP ytd summary report, it clearly shows amounts for the employee as follows:
Total gross payments (made pre -death)
PAYG W and Super amounts (made pre-death)
The unused leave upon death does not show in my YTD Verification report or my Employee’s payment summary report as it is Not Reportable and I am told this is the correct way.
Also, ensure that this amount is not included or pre-selected for lodging your BAS/IAS.
In addition, there might be a time limit for you to pay this out (I think it's somewhere between 6 months to a year) or it can be treated differently with the ATO. I am not sure if a large amount is owed whether that makes a difference too. In my case it wasn't exorbitant so I followed the above rules.
Remember too, that your state's workcover laws may not need for you to include the ETP in your Remuneration declaration, but any gross earnings and super made pre death are still to be included and declared (in my state anyway!)
