Set Up Death Benefit ETPs
Prior to processing death benefit ETPs, you must create an earnings code as well as a deduction code for taxation purposes.
Once you have set up these codes, you can then manually process a timecard record for this type of payment.
- In the PR Earnings Codes form, create an earnings code for the death benefit ETP. On the Addl Info tab, from the ATO Category drop-down, select ETPD - Employment Termination, Death. For more information, see Set Up Earnings Codes: Australia.
- In the PR Deductions / Liabilities form, create a deduction code for taxation purposes. When creating the code, use the following settings:
- On the Info tab, select R-Routine from the Method field and enter ETPMargina in the Routine field.
- On the Addl Info tab, select Tax Withheld ETP Death from the ATO Category field.
- Enter the corresponding earnings code(s) on the Basis Codes tab.Important: In order for the ETP deduction to be calculated during payroll processing, you must also enter this deduction code in the DLCode column of the PR Federal Info form (Add'l Federal Based Dedns/Liabs tab).
For more information, see Create Deduction and Liability Codes.
- The system removes any applicable non-taxable invalidity portion based on the employee's years of service and wages lost through retirement age.
- The system removes any applicable non-taxable portion for the employee's term of service prior to 1 July 1983.
- Any remaining amount is taxed based upon the preservation age and the ETP cap limit (ETP Cap field, PR Limits and Rates form).
- If there is an amount that exceeds the ETP cap limit, the system taxes this amount using the rate in the Excess of Cap Rate field (PR Limits and Rates form).