This interpretation statement considers whether amounts paid by employers on the death of an employee are taxable to the recipients, which could include executors and family members. The statement also considers the deductibility of payments made by employers, whether employers have PAYE obligations in respect of payments, and the duties of executors to file tax returns for the deceased employee and any estate that may arise.

In CA ANZ’s view, once finalised, this statement will be useful to employers, advisors, and Inland Revenue teams.

CA ANZ suggests that the discussion about the Commissioner’s position regarding whether a payment by an employer on the death of an employee is in connection with the deceased employee’s employment or service should be amended. For completeness, CA ANZ also recommends expanding the draft to address the tax implications for an employer of a gratuitous payment made to a third party, as well as the treatment of an employee loan that is forgiven on their death.