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Important update: If you have received an opt out notice about the JB Hi-Fi Class Action, read more here.
Superannuation and Income Tax
The following information is based on general advice the Scheme Administrator has received from taxation and superannuation specialists. This is intended as information only. You should seek your own personal taxation and financial advice in relation to your compensation payment and circumstances.
Superannuation
In Australia, the Superannuation Guarantee system requires an employer to pay superannuation on “ordinary hours”. Overtime is not considered ordinary hours, therefore in the context of the Settlement Scheme, superannuation is not payable on the Unrostered Overtime or Rostered Overtime components. It is only payable on Unpaid Meal Breaks which are considered ordinary hours. This is provided for in the Loss Assessment Formula.
Superannuation is to be calculated at the prescribed rate applicable at the time the superannuation payment is to be paid, not the rate that was applicable at the time the wages should have been paid.
Therefore, the Scheme Administrator is required to calculate and pay superannuation at the current rate of 12%, as set by the Superannuation Guarantee laws. The Superannuation Guarantee system requires this superannuation payments must be made directly into your superannuation account.
Your Notice of Assessment will provide a breakdown of your Estimated Loss and Distribution Payment, including any superannuation payable on your behalf. If you are receiving a superannuation payment you will be asked to provide the Scheme Administrator with certain details relating to your Super Fund.
Income Tax
The class action sought compensation for underpayment of wages (overtime and meal breaks). Therefore, Distribution Payments made under the Settlement Scheme are considered wages and therefore taxable as ordinary income.
The Scheme Administrator is required to withhold PAYG from your Distribution Payment and remit that tax to the ATO on your behalf.
On the Scheme Administrator’s request, the ATO has approved a class wide variation to the PAYG withholding rate. This means a PAYG rate of 39% will be applied to all Group Member Distribution Payments. The Scheme Administrator sought the class variation to make the PAYG assessment and withholding process more efficient and cost effective.
Without a class variation, the Scheme Administrator would be required to determine and individually calculate each Participating Group Member’s appropriate tax withholding rate for each financial year based on their personal circumstances, adding costs and delay to the assessment and payment process.
Please note that 39% is not the final rate at which you will be taxed, but rather a best estimate for withholding purposes only. We understand that many people’s tax rate throughout the period (2014 to 2024) would have varied and likely been lower earlier in the period than in the later stages or currently.
If a PAYG rate of 39% has resulted in too much tax withheld in your circumstances, you will receive a refund for the difference at the time you complete your next tax return, likewise if we have not withheld enough, you will have a tax liability at the time you complete your tax returns. The rate of 39% was chosen because it was expected that it would be closest to the average tax rate of Participating Group Members.
At the time the PAYG tax is remitted to the ATO on your behalf, the Scheme Administrator will provide the ATO with a breakdown of the compensation you are receiving by reference to each financial year it applies to. The ATO will use this breakdown to apply what is known as the Lump Sum E Tax Offset.
This offset is designed to prevent you from paying excessive tax when you receive a large back payment in one financial year for income earned in earlier years. Normally, all income is taxed in the year you receive it, which could push you into a higher tax bracket. The offset adjusts for this by approximating the tax you would have paid if the income had been spread across the years it relates to.
We recommend you seek independent taxation and financial advice at the time of completing your next tax return.
Foreign Residents
Your payment under the NSW Junior Doctors class action relates to work you performed in Australia. Under Australian tax and superannuation law, income earned in Australia remains Australian‑sourced income, even if you now live overseas. Because of this, the same tax and superannuation rules apply to you as they do to group members who currently live in Australia.
PAYG tax withholding
PAYG tax must be withheld from the Distribution Payments. Under Australian law withholding is mandatory and applies regardless of where you currently live or where your other income is earned. The Scheme Administrator has no discretion in relation to withholding PAYG tax regardless of whether a group member is a foreign resident or not.
Tax File Number (TFN)
A valid TFN is required to process your Distribution Payment. As you previously lived and worked in Australia, you were issued a TFN for life. If you have left Australia, your TFN may be inactive, but it is not cancelled. If your TFN is inactive, you can contact the Australian Taxation Office (ATO) to have it reactivated for the purpose of lodging an Australian tax return.
Australian tax return
Because your Distribution Payment relates to Australian‑sourced income, even if you no longer reside in Australia, you’ll still need to lodge an Australian tax return. Any foreign tax treatment (for example, whether you are exempt from the 2% Medicare levy and whether you can claim a foreign tax credit in your country of residence) is something you need to discuss with your tax adviser.
Superannuation
If your Notice of Assessment includes an amount for superannuation, even if you are a foreign resident, the Scheme Administrator is required to pay that superannuation amount directly into your Australian superannuation fund in accordance with the Superannuation Guarantee laws. If you do not have an Australian superannuation fund, the superannuation amount will be paid to the ATO who will then attempt to locate your last known superannuation account and make payment to that account. There is no alternative option to have the superannuation component of your Distribution Payment paid directly to you.