Death of an employee
Generally, you should not withhold amounts from salary or wages paid after the death of an employee. This applies to income that was earned before their death but paid afterwards.
Similarly, you should not withhold amounts from payments for unused annual leave or unused long service leave paid after their death.
You may need to withhold from a death benefit employment termination payment (death benefit ETP). This represents any amount that would have been an paid in ETP if the employee was alive at the time of payment. Examples of payments in a death benefit ETP can include:
- unused sick leave
- unused rostered days off
- a payment for redundancy or retirement (a 'golden handshake').
Payer guide
The following table provides a step-by-step guide for payments made to a deceased employee.
If you report through Single Touch Payroll, you can choose whether to provide a payment summary. For more information, see:
- Single Touch Payroll Phase 1 – death benefit ETP
- Single Touch Payroll Phase 2 – paying an ETP to a death beneficiary
Step | Action |
|---|---|
1 | Prepare a payment summary for payments made to the employee in the current financial year before the date of death showing:
|
2 | Prepare the employee's entitlement including:
Do not:
|
3 | Calculate the amount of death benefit ETP. Withhold the required amount as listed in Schedule 11 – Tax table for employment termination payments. |
4 | Payments for work or services made after the death of the employee are made to either the:
These amounts must not be shown on the deceased employee's payment summary. However, the payer may wish to provide the estate, trustee or executor of the deceased employee with a statement about these payments to assist in completion of the income tax return for the deceased estate. |