In the unfortunate event that an employee dies, no further payments should be made to the employee in MicrOpay. Instead, you will need to hold any outstanding payments until you have been advised by the Executor of the deceased estate.
There may be circumstances that the employer may not be aware, such as debts or child support. Due the nature of the termination and delays that can occur in obtaining the required information, it is recommended that all payments be made outside of MicrOpay.
Upon the death of an employee, there are several things to consider. These include:
What amounts may be owing (e.g. salary or wages, unused leave entitlements or possible Employment Termination Payments (ETPs) etc.)?
Who should the amounts be paid to (e.g. the Estate or a Person)?
What tax, if any, should be withheld?
What TFN (Tax File Number), if any, needs to be used?
What information needs to be provided about the payments and to who?
How that information needs to be provided (e.g. Statement about the payments, Payment Summary, etc.)
For more information, please refer to the below links:
When an employee transfers or leaves | Australian Taxation Office (ato.gov.au) - refer to the sections about ETP types you can report and Paying an ETP to a death beneficiary
Any outstanding salary or wages, paid leave taken, allowances, overtime, bonuses and commissions, or directors’ fees that were payable upon death of the employee but not paid to the employee before death and are not ETPs should be completed manually outside of MicrOpay. Depending on the instructions from the estate the payments are made to either the estate of the deceased employee or the person entitled to the money under instruction from the correct authority. These amounts must not be shown on the deceased employee's STP update to the ATO; however these amounts will need to be included in your BAS reporting.
Any ETP payments owed to the employee need to be paid to either the estate of the deceased employee or the person entitlement to the money. These amounts will need to be reported via STP and in some circumstances, tax is withheld. Payments can include any unused RDOs or unused Sick Leave (if applicable).
To Terminate the Employee Record in MicrOpay
To terminate the employee record with a Termination Reason of Death please complete the following steps:
Go to Payroll, Transactions, Processing, Terminations.
Select the deceased employee.
Enter the Termination date, click on the Termination Reason dropdown, and select Death.
Once the Termination Reason of Death is selected, a window will appear as to the type of recipients. There will be three choices:
Trustee
Non-Dependent
Dependent
If your selection is Non-Dependent, you will also receive the following question regarding whether the payments relate to the current financial year or not. This will appear with a different ATO STP Payment Summary Code. N if Yes is selected, and B if No is selected.
The STP Cessation Reason should automatically populate with Deceased. (This field is available in version 9.1 SP1.)
Untick Generate Payment.
As no payment should be made to the deceased employee, change the hours and values that appear in the Termination record to zero.
Click Process.
No further transactions can be entered against this Employee. The ATO will receive the current Year to Date values when STP Reporting and STP Update are completed.
ETP Payments
If there are any ETPs that need to be paid and reported via STP, you can follow the steps below.
Note: if the recipient is an existing employee, e.g., an employee you currently pay, there are different STP reporting requirements. Refer to the ATO for more details.
Duplicate the Employee Record
Please follow the steps below to process the termination.
Go to Payroll, Maintenance, Employees, Employees.
Find the deceased employee and right-click.
Select Duplicate from the menu.
Enter a new Employee Code and update any other details, e.g., change the name to the Trustee's name.
Next, go to Tax Details and click on TFN Declaration.
If you have a TFN for the trustee, dependent, or non-dependent, enter the details; otherwise, select No TFN quoted and click OK to save.
Change the ATO Defined Special Category to Death Beneficiary.
On Pay Details change Autopay to No
Update Bank Details as advised by the Executor.
As unused leave payments don't need to be reported via STP, remove the leave classes from Leave. The exception to this will be any leave that is paid out as an ETP, e.g., unused Sick Leave, RDO, etc.
If there are Termination Details, untick the Termination to clear these.
Click OK to save.
Process the ETP payments
Go to Payroll, Transactions, Processing, Terminations.
Select the duplicated employee record, e.g., the Trustee.
Enter the Termination date, click on the Termination Reason dropdown, and select Death.
Once the Termination Reason of Death is selected, a window will appear as to the type of recipients. There will be three choices:
Trustee
Non-Dependent
Dependent
If your selection is Non-Dependent, you will also receive the following question regarding whether the payments relate to the current financial year or not. This will appear with a different ATO STP Payment Summary Code. N if Yes is selected, and B if No is selected.
The STP Cessation Reason should automatically populate with Deceased. (This field is available in version 9.1 SP1.)
As any payments for unused leave shouldn't be reported via STP, change the hours and values for Annual and Long Service Leave to zero.
Select Total ETP Components and enter the value of the ETP to be paid. You will need to calculate this manually.
Click Process.
In most instances, any outstanding super payments will need to be paid to the Estate as the Superannuation Fund won't accept any further payments. For the latest information, use the ATO as your main reference.