Implementation Plan for Settlement Distribution Scheme

The Implementation Plan for Settlement Distribution Scheme explains the settlement for the Income Compliance or ‘robodebt’ class action.

What the Settlement Distribution Scheme is

The Commonwealth and Gordon Legal have settled the Income Compliance 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 group members of the Income Compliance class action. As part of the settlement, the Commonwealth will make payments to eligible 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 notify group members of the settlement outcome and their eligibility
  • provide 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 have to complete a number of steps before we can start making settlement payments. The Implementation Plan for the Settlement Distribution Scheme gives a timeframe for each step.

As part of approving the settlement, the Court ruled people who lodged an objection to the settlement had another chance to opt out of the class action. This opt out period has ended.

The Scheme Assurer and Gordon Legal need to confirm key steps of the plan are complete before it can progress to the next step.

Key steps in the distribution process:

Phase Action
Phase 1

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

Timeframe: This is complete.

Phase 2

Notification: When we’ve worked out the category of each group member’s debts and whether they’re eligible for a settlement payment or not. We’ll write to all of them. We’ll also explain how to get more information, ask for a review and update their preferred payment destination.

Timeframe: Complete. We notified group members of their debt category in November 2021. Registration closed on 11 February 2022.

Phase 3

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

Timeframe: Calculations are in progress. We’ll start notifying eligible group members how much their settlement payment will be by mid 2022.

Who’s eligible

Group members will be eligible for a settlement payment if they have 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 will be 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 will fall 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 will no longer need to repay the debt.

These group members will not 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, whether 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 have 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 had not overpaid the recalculated debt.

These group members will not get a refund or a settlement payment.

Category Four, Not Eligible

Group members whose debts were not based on averaged ATO income information.

These group members will not 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 provide 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’ll calculate and distribute payments

The amount eligible 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.

We’ll calculate each person’s settlement payment amount in a similar way to interest.

We’ll use the interest rates set by the Federal Court to calculate each group member’s portion of the agreed settlement sum.

Once all previous steps have been completed, we’ll distribute payments to group members. We expect to start making settlement payments by mid 2022.

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: 15 March 2022