Implementation Plan for Settlement Distribution Scheme

The Implementation Plan for Settlement Distribution Scheme explains the settlement for the robodebt class action, also known as the Income Compliance class action.

What the Settlement Distribution Scheme is

The Commonwealth and Gordon Legal have settled the robodebt class action. The Federal Court approved the settlement on 11 June 2021.

The Settlement Distribution Scheme is the plan for how the Commonwealth will distribute settlement payments to eligible, registered group members of the robodebt class action. As part of the settlement, the Commonwealth is making payments to eligible registered group members in place of interest.

The Settlement Distribution Scheme is a requirement of the settlement agreement. It explains how the Commonwealth will do all of the following:

  • work out who is eligible for a settlement payment
  • find and tell group members of the settlement outcome and their eligibility
  • give options and the time frame for group members to dispute their eligibility, if they wish
  • calculate and distribute settlement payments.

The Commonwealth has appointed an independent Scheme Assurer. This is a Federal Court requirement. They will ensure the settlement distribution is equitable and completed in line with the settlement agreement.

How we’ll implement the scheme

We had to complete a number of steps before we could start making settlement payments. The Implementation Plan for the Settlement Distribution Scheme gives a timeframe for each step.

The Scheme Assurer and Gordon Legal reviewed and confirmed each step of the plan was completed before we progressed to the next step.

Key steps in the distribution process:

Phase Action
Phase 1

Categorisation: Services Australia identified group members who will and won’t get a settlement payment.

Timeframe: Completed in October 2021.

Phase 2

Notification: We worked out the category of each group member’s debts. We wrote to all of them, to let them know if they’re eligible for a settlement payment or not. We also explained how to get more information, ask for a review and update their preferred payment destination.

Time frame: Completed. We notified group members of their debt category in November 2021. Group members who needed to register a payment destination had until 11 February 2022 to do this.

Phase 3

Calculation and payment: Working out how much to pay each eligible registered group member. We’ll write to all eligible registered group members to tell them how much they’ll get. We’ll do this before we pay them.

Time frame: In progress. Calculations are complete. We’ll notify eligible registered group members how much their settlement payment will be from 5 September 2022. Everyone should be paid by 30 September.

Who’s eligible

Group members are eligible for a settlement payment if they paid money towards a debt that was based in full, or in part, on averaged Australian Tax Office (ATO) income information.

Not every group member is eligible for a settlement payment.

Group members who didn’t make any repayments on a debt raised using averaged income information won’t get a settlement payment.

Each debt fell into one of the following categories:

Category Outcome
Category One, Not Eligible

Group members whose debts were based on averaged ATO income information and who made no repayments.

These group members will have their averaged debt zeroed. This means they'll no longer need to repay the debt.

These group members won't get a refund, or a settlement payment.

Category Two, Eligible

Group members whose debts were partly or wholly based on averaged ATO income information, and had made a repayment towards those debts.

These group members will get a settlement payment.

This payment is in addition to the refund that these group members get under the government’s announcement on 29 May 2020.

Category Three, Eligible

Group members whose debts were initially based on averaged ATO income information, but then were recalculated using payslips or bank statements, and had overpaid the recalculated debt.

These group members will get a settlement payment for the overpaid amount of their recalculated debt, even if the overpayment was refunded or applied to pay a valid debt.

This group will not get an additional refund under the government’s announcement of 29 May 2020, as any original overpayment would've been refunded at the time of recalculation.

Category Three, Not Eligible

Group members whose debts were initially based on averaged ATO income information, but then were recalculated using payslips or bank statements, and they hadn't overpaid the recalculated debt.

These group members won't get a refund or a settlement payment.

Category Four, Not Eligible

Group members whose debts weren't based on averaged ATO income information.

These group members won't get a refund or a settlement payment.

How we notified group members if they’re eligible

We sent letters to group members about their debt category and eligibility for a settlement payment in November 2021. We sent the letters to their myGov inbox or in the post.

The letters explained all of the following:

  • what category each debt is in
  • whether or not they’re eligible for a settlement payment
  • the deadline to give or update their bank details or payment destination
  • how to ask for a review if they believe their debts are in the wrong category
  • the deadline to ask for a review.

Group members had until 10 December 2021 to ask for a review. Group members could also ask for a review if they thought we hadn’t included an eligible debt.

How we’re calculating and distributing payments

The amount eligible registered group members will get depends on all of the following:

  • when they paid money towards eligible debts
  • how much they paid
  • when they were refunded
  • and how many eligible group members registered for a settlement payment.

Settlement payments were calculated in a similar way to interest. We used the interest rates set by the Federal Court to calculate each group member’s portion of the agreed settlement sum.

What are the next steps

We’ll make settlement payments after we send people a letter with how much they’ll get. Everyone should be paid by 30 September 2022.

Eligible registered group members have up to 30 days after receiving their settlement payment to ask for a review if they think it is incorrect.

Read the Settlement Distribution Implementation Plan:

A previous version of the Settlement Distribution Scheme Implementation Plan was originally published on 11 February 2021. You can view the previous version here:

Page last updated: 17 November 2022