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When a worker leaves

Meeting your tax, super and employment termination payment obligations when someone stops working for you.

Last updated 24 August 2021

When someone stops working for you, you may need to:

  • make employment termination payments
  • report those payments to us
  • meet superannuation obligations
  • meet fringe benefits tax (FBT) obligations.

Find out about:

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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 prior to death, but paid after the death of the employee.

Similarly, you should not withhold amounts from payments for unused annual leave or unused long service leave paid after the death of the employee.

You may need to withhold from a death benefit employment termination payment (death benefit ETP). This means any amount that would have been an ETP if the employee was alive at the time of payment.

Examples 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.

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Guide for payments made to a deceased employee




Prepare a payment summary for payments made to the employee in the current financial year, showing gross payments and amounts withheld before the date of death.


Prepare the employee's entitlement including:

  • payments for work or services, including retrospective pay and bonus or commission payments, accrued before the death of the employee but not paid prior to the date of death    
    • these payments are included in assessable income if an estate tax return is required
  • payments for unused annual and long service leave which are tax-free and not included in assessable income if an estate tax return is required.

Do not:

  • withhold an amount from the payment
  • include details of these payments in the employee's payment summary.



Calculate the amount of death benefit ETP and withhold the required amount as listed in Schedule 11 – Tax table for employment termination payments.


Payments for work or services made after the death of the employee are made to either the:

  • estate of the deceased employee
  • person entitled to the money under the relevant law, industrial award or agreement.

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 person's estate.

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