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When an employee passes away, you will need to process a special pay to their beneficiaries, which may include:

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

In this guide

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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".

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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.

Recording employment termination details for deceased employees

Deceased employees need to have their employment termination details updated to let the ATO know why they stopped working.

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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.

Updating tax scales for deceased employees

Deceased employees  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.

Processing

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ETP payments

To 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. 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.
   Add the following
   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.