Death of Employee

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!)

thank so much yes it is a very sad time sorry for your loss as well

I paid out all the entitlements owing (no tax or super) to the solicitor handling his estate.

I set up a payroll category 'Death Benefit ETP' - and the ATO setting 'not reportable'

I changed the banking details for payment to the solicitor's banking details.

After all that, I terminated him due to deceased.  (sad)

I am not sure if this was 100% correct, but it seemed to all be ok at the EOPY !!

did you end up doing a payment of leave entitlements at $0 to remove the employee and entitlements from the system? as I believe it it cant go through the payroll system and no tax or super 

Hi, What did you want to know??

Hi cramptons​ hoping you can help as I am in this situation what did you end up doing?

I actually figured it our the best I could, with no help from MYOB, as usual.

Hi HoneySandra,

I can see that you would like to know on how you can process a final pay to a deceased employee. First. I'm so sorry to hear that. You may check this helpful article as it has detailed information on how you may process it.

Feel free to write a post if you need further assistance.

Cheers,

Jem

Did you get a solution to this query?

Thanks

Also, when I set up the Payment Classification -''Death Benefit ETP', as PAYG exempt and 'not reportable', do I overide the Employees Wage Expense Account? and if so - to what account do I put it?   I am assuming I have to do this, as the payment is not being paid to the employee, but to the Trustee of his estate???