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Death benefit payments are early termination payments (ETPs) paid by your organisation to beneficiaries of the deceased including:

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In this guide we will show you how to process early termination payments for deceased employees.

In this guide

1. Renaming deceased employees 

2. Recording employment termination details for deceased employees

3. Updating tax scales for deceased employees

4. Processing the final payments

1. Renaming deceased employees

AnchorrenamingdeceasedemployeesrenamingdeceasedemployeesRename the deceased employee to 

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Renaming deceased employees

The Australian Tax Office requires deceased employees need to be renamed to include the phrase "Estate of the Late".

To rename a deceased employee:

1. Select Module > Payroll > Payroll Employee Maintenance using the Main menu.
2. Search for the deceased employee.
3. Select the record of the deceased employee using the Payroll Employee Selector, if necessary.
4. Click the Personal tab.
5. Click to launch Community Maintenance.
6. Type Estate of the Late into the Surname field.
7. Click OK.
8. Click File > Save using the Main menu.

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Recording employment termination details for deceased employees

AnchorrecordingterminationdetailsrecordingterminationdetailsEmployment termination details are recorded Deceased employees need to have their employment termination details updated to let the ATO know that the employee why they stopped working at your organisation due to their death.

To record employment termination details:

1. Select Module > Payroll > Payroll Employee Maintenance using the Main menu.
2. Search for the deceased employee.
3. Select the record of the deceased employee using the Payroll Employee Selector, if necessary.
4. Click the General tab.
5. Select the Terminated field to flag the employee as terminated.
6. Select the employment termination date using the Terminated Date field.
7. Select the Deceased using the Reason drop-down list.
8. Click OK.
9. Click File > Save using the Main menu.

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Updating tax scales for deceased employees

AnchorupdatingtaxscalesupdatingtaxscalesDeceased employees need to have their tax scale changed to DBXX (Death Benefit).

To update the tax scale of a deceased employee:

1. Select Module > Payroll > Payroll Employee Maintenance using the Main menu.
2. Search for the deceased employee.
3. Select the record of the deceased employee using the Payroll Employee Selector, if necessary.
4. Click the Tax tab.
5. Select DBXX using the Tax Scale drop-down list.
6. Click OK.
7. Click File > Save using the Main menu.

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Processing

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ETP payments

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processingfinalpaymentsTo process the final payments:

1. Create a special pay for the deceased employee. See Creating special pay runs.
2. Select Module > Payroll > Current Pay Maintenance from the Main menu.
3. Add the following Click Image Added.
4. Select the ETP pay code using the Pay Code field.
   
   Note: ETP Pay codes have:
   
   • Pay Code Type of either:
   
   - Other Payment - Termination
   - Other Payment - Withholding
   
   • Reporting Category of either:
   
   - ETP-Tax-Free Component
   - ETP-Taxable Component
   - ETP-Withholding.
   
   See Pay Code Maintenance - General tab.
   
   
5. Select the ETP reason using the ETP Reason field. You can select:
   
   • B - Death Benefit - Split ETP Type N
   • D - Death Benefit - Dependant
   • N - Death Benefit - Non-dependant
   • T - Death Benefit - Trustee of the Deceased Estate.
   
   
6. Add any additional pay code lines as required:
   • Salary and Wages necessary.
7. Finalise the special pay using the Finalise Payroll window. See Finalising payroll.