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 Settlement Distribution Scheme is the plan for how the Commonwealth will distribute settlement payments to group members of the Income Compliance class action. As part of the settlement, the Commonwealth will make payments to eligible group members in lieu of interest.

The Commonwealth and Gordon Legal have agreed to settle the Income Compliance class action. The Federal Court approved the settlement on 11 June 2021.

Before the Settlement Distribution Scheme commences, group members who objected to the settlement will have a second chance to opt-out of proceedings.

We’ll contact group members who objected to provide them with more information.

Once this opt-out process is complete, the Commonwealth will have 12 months to distribute all settlement payments.

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

  • 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. They will ensure the settlement distribution is equitable and completed in line with the settlement agreement.

There are a number of steps that need to happen before we can make settlement payments. The Implementation Plan for Settlement Distribution Scheme gives a timeframe for each step.

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 in progress.

Phase 2

Notification: When we’ve categorised each group member, we’ll write to all of them. We’ll tell them if they’ll get a payment. We'll also explain how to get more information, ask for a review and update their bank details.

Timeframe: We'll do this from late 2021.

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: We'll do this from early 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 part, on averaged ATO income information.

Not every group member will be eligible for a payment.

Group members will fall into one of the following categories:

Category Outcome
Category One, Not Eligible

Group members whose debts were based on averaged ATO data and have made no repayments.

These group members will have their averaged debt zeroed.

These group members will not receive a refund, or a settlement payment.

Category Two, Eligible

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

These group members will receive a settlement payment.

This payment is in addition to the refund that these group members have received under the Government’s announcement of 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 receive 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 receive 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 receive 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 receive a refund or a settlement payment.

How we’ll notify group members

We’ll write to group members with more information about their category. We’ll send letters to their myGov Inbox or in the post.

The letters will explain:

  • what category they’re in
  • whether or not they’re eligible for a settlement payment
  • how to lodge a dispute if they believe they’re in the wrong category
  • the deadlines to lodge a dispute and provide or update their bank details or payment destination.

When we send the letters, a web portal and dedicated phone line will be available for group members. They’ll be able to request information, lodge disputes and record or update their bank details here.

How we’ll calculate and distribute payments

We’ll calculate settlement payments in a similar way to an interest payment.

We’ll apply the interest rates set by the Federal Court as a way to calculate each group member’s share of the lump sum.

The amount group members will receive depends on when they paid money towards eligible debts, how much they paid and when they were refunded.

Once all previous steps have been completed, we’ll distribute payments to group members. Payments requiring manual processing or tailored servicing may take longer. We expect to begin making payments in early 2022.

Read about the Settlement Distribution Implementation Plan:

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

Page last updated: 11 June 2021