Deceased employee payment to beneficiary
Death of an employee, current. Have read ATO info, and had accountants assistance.
However still unclear to me how to process via Myob or not process via Myob? The total amount owing to the deceased employee is less that $260k (ETP Cap 2025-26) so am I correct in assuming this is not an ETP, but an untaxable amount to be paid?? This will be paid directly to the beneficiary.
One legal article notes "Outstanding wages, allowances, etc payable on the death of an employee are not reported via Payroll, so not reported via STP". Is this correct? Also notes that a prepared statement showing the break-up for the amounts payable may be made available to the recipient- estate, executor, or trustee or beneficiary. This statement is completed & ready to give to the beneficiary.
However a separate Myob article indicates that it is processed via STP, using D for death for employment basis & DBXXXX for tax treatment code. Says set up the beneficiary as a new payee in payroll, using TFN,DOB. However the beneficiary is already on our payroll as is the husband of the deceased.
So I am confused as to what is the correct legal way to process. I've been trying to get ATO on the phone with no luck.
I very much need clarification of this very sad question. Thanks Debbie G
Hi debbieg,
I’m sorry to hear about your employee’s passing. For the situation you’re dealing with, outstanding wages and leave owed at the time of death are usually paid directly to the beneficiary or estate and aren’t processed through payroll or STP because they’re not treated as an ETP. A death‑benefit ETP only applies if specific entitlements are involved, and if none of those apply, you can pay the amount outside MYOB and give the statement you’ve prepared. If there's an ETP component, only that part goes through STP using the correct death codes. Here's a link from ATO about PAYG withholding for deceased employees. If you need any more help sorting this out, you’re welcome to reach out to our team. You can contact them on Live Chat via our virtual assistant, MOCA, or by submitting a support case via My Account.
Cheers,
Doreen
