Income Tax

Distribution Payments made under the NSW Junior Doctors Class Action Settlement Scheme are considered wages and therefore taxable as ordinary income.

Maurice Blackburn is required to withhold PAYG from your distribution payments and remit that tax directly to ATO. A PAYG withholding rate of 39% has been applied to all Participating Group Member’s Distribution Payments. This standard withholding rate was sought by Maurice Blackburn to make the PAYG assessment and withholding process more efficient and cost effective. A 39% withholding rate was an estimate used for withholding purposes and is not the final rate at which you will be taxed.

Without a class variation, Maurice Blackburn would have been 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.

Lump Sum E Amount and Offset

Your Remittance Notice contains a PAYG Payment Summary – Breakdown of Lump Sum E Amount.

The class action Claim Period covers the period December 2014 – March 2024. Therefore, part of your Distribution Payment relates to employment entitlements that accrued over several financial years.

Normally, when you receive employment income, it is taxed in the financial year in which the income is earned. Because the Distribution Payment is being paid as a lump sum in one financial year (FY2027), this may result in you having a larger taxable income in FY2027 than you otherwise would.

The ATO has special rules known as the Lump Sum E Tax Offset which are designed to prevent people from paying more tax simply because they have received a payment that relates to work performed over several earlier years.

When completing your next income tax return, you should provide this information to the ATO (or your financial advisor) so that the ATO can determine whether you are entitled to a Lump Sum E Tax Offset.

The amount of any tax offset depends on your individual circumstances, including your other income, deductions and personal tax position. For this reason, the Scheme Administrator cannot tell you whether you will receive a tax offset or how much it may be.

Interest Weighting

Your Distribution Payment includes an amount for Interest Weighting. The Interest Weighting is to recognise that a Participating Group Member who is being compensated for underpayment of wages in the earlier part of the Claim Period has had to wait longer than a Participating Group Member who is being compensated for underpayment of wages in the later part of the Claim Period.

For taxation purposes, please note the Interest Weighting:

• Forms part of your income for taxation purposes and will be treated as interest income for the 2026-2027 financial year.
• Is not subject to PAYG, therefore no PAYG has been deducted.

Interest Earned on Settlement Sum

This component of your Distribution payment is your proportionate share of the bank interest earned on the Settlement Sum after deduction of Administration Costs. This interest payment is paid in accordance with Clause 10 of the Settlement Scheme, and all eligible group members receive a share of the residual interest income in the same proportion as their share of the settlement fund.

For taxation purposes, please note, the Settlement Sum Interest:

• Forms part of your income for taxation purposes
• Is a trust distribution from interest income for the 2025-2026 financial year. If you have already lodged you FY25/26 tax return, you should speak to your financial advisor regarding how this interest income should be dealt with.
• Is not subject to PAYG, therefore no PAYG has been deducted.

Foreign Residents 

This information applies to those Participating Group Members who stated that they are Foreign Residents for tax purposes.

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.

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. Maurice Blackburn has no discretion in relation to withholding PAYG tax regardless of whether a group member is a foreign resident or not.

Foreign Residents - 10% Withholding Tax

Because you have indicated that you are a foreign resident for tax purposes, Maurice Blakcburn is required by Australian law to withhold a 10% on the Interest Weighting and Interest Earned on Settlement Sum components of your Distribution Payment. The amount of interest withheld is set out in your Remittance Notice.

The rationale for this Foreign Resident Withholding Tax on interest income is that the ATO wants to ensure that Australian tax is collected before the money leaves Australia and is paid to someone overseas. By collecting the tax at the time of the payment, the Australian Government ensures that the tax on Australian Sourced income is collected efficiently rather than relying on foreign residents to lodge an Australian tax return and voluntarily pay the tax later.

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 financial or taxation adviser. Your Remittance Notice contains all the relevant information you require to obtain independent advice and lodge your tax returns.

Superannuation

If your Notice of Assessment includes an amount for Unpaid Meal Break and superannuation, even if you are a foreign resident, Maurice Blackburn is required to pay that superannuation entitlement into a superannuation fund on your behalf. It cannot be paid directly to you.

You were asked to provide the details of your nominated superannuation fund. If you do not have an Australian superannuation fund or the superannuation fund details you provided were incomplete or could not be verified or your superannuation entitlement is unsuccessful and returned to Maurice Blackburn, we are required to pay your superannuation entitlement directly into a Default Super Fund. A Default Super Fund is a complying superannuation fund that acts as a fallback destination for superannuation payments. This ensures that your superannuation entitlement is paid and protected, even where we cannot locate or verify your preferred super account. Once the payment has been made to the Default Super Fund, we will provide you with the details of the Default Fund so that you can locate the account and, if you wish, transfer or consolidate the funds into your preferred superannuation account

Due to the recent introduction of the Pay Day Super laws, there are currently administrative delays with the ATO processes required to set up and make payments into the Default Super Fund. Therefore, it may take 4 – 6 weeks for us to notify you if your superannuation entitlement has been paid to a Default Super Fund.