Q1: Why did RSPCA Queensland commence a review of team member payments?

The review was commenced as part of a proactive governance exercise reviewing our systems, processes and team structures. Resultantly, at the end of 2022 we instigated some changes in our payroll processes and payroll team structure to safeguard the oversight and controls we had in place to ensure that our team members were being paid correctly.   

During the payroll function transition, we identified some anomalies in our payroll systems and proactively engaged PricewaterhouseCoopers (PwC) to complete a comprehensive governance review of our payroll processes, systems and outcomes.

Q2: What did RSPCA Queensland learn through the review of team members’ payments?

The review identified areas where historically the interpretation of certain pay conditions and awards had been incorrect, or the time and attendance system was set up incorrectly or was not linked correctly to the payroll system, resulting in the identification of underpayments.  

The industrial instruments involved are the RSPCA – Queensland Inc. General Staff Award Enterprise Agreement 2019, the Clerks – Private Sector Award 2020, the General Retail Industry Award 2020, the Inspectorate Certified Agreement, and Restaurant Industry Award 2020, with impacts varying by individual.

Q3: Does this affect all RSPCA Queensland team members?

No, this does not affect all team members. Current team members who are affected have been contacted directly and we are proactively reaching out to impacted former team members. 

Q4: Why didn’t I receive a letter?

Only staff who have been impacted will receive a letter. These are staff that are (or were) covered by the industrial instruments above and will receive a back payment. Staff paid under other agreements or individual contracts have not had any underpayments identified in the review.

Q5: What were the issues that led to under payments?

The errors in the calculation of wage and superannuation payments identified relate to historical interpretation of certain industrial instruments and incorrect set up of pay conditions in the payroll system, or the time and attendance system was set up incorrectly or was not linked correctly to the payroll system. 

The errors arose because of genuine oversights. We sincerely apologise to those team members affected and we would like to thank you for your understanding as we proactively finalise the resolution of this matter.

Q6: What has been done to ensure this does not occur again?

Changes and controls implemented in the payroll system are already proving effective in ensuring the relevant industrial instruments are interpreted correctly and systems setup are appropriate. Further to this, RSPCA Queensland has implemented a new Human Resources Information System, which replaced the historical payroll systems and ensure significantly increased system controls are in place to prevent the errors of the past reoccurring in the future. Finally, to provide a further layer of governance and comfort for our employees RSPCA Queensland will also conduct a further independent review in 12 months’ time.

Q7: What is the time period of the review?

RSPCA Queensland has reviewed payments retrospectively for the period from February 2017 to June 2023.

Now that the Human Resources Information System has been fully implemented and thoroughly tested, the period post June 2023 will be reviewed, and it is possible that some team members may receive a payment covering the period from 1 July 2023 if identified.  

Q8: What is the value of the underpayments identified through the review?

The total amount of back payments is $2.8m across 1,130 employees (current and former), with the average payment being $2,474 per impacted employee. We note that this represents less than 1.9% of the total payments made to our team members over the review period.

Q9: Will interest be paid on the payment?

Yes, all payments will include an additional sum in recognition that affected staff have not had access to these payments. Interest on back payments, including any associated superannuation, has been calculated, and will be paid at 5.5% per annum. In accordance with ATO requirements, interests on any superannuation guarantee payments which were late or otherwise not paid when due, has been calculated at 10%.

Q10: Does the payment attract superannuation?

RSPCA Queensland will make employer superannuation contributions at the current rate of 11.5% (as opposed to the rate that was current at the time) on the ordinary time earnings component of back payments. However, not all components of a back payment will attract superannuation, for example payment of overtime or the interest component of a payment do not attract superannuation. Where the superannuation calculated on your back payment is not equal to your applicable superannuation rate percent of the back payment, this is likely because a portion or all your back payment is an overtime payment.

In addition to paying superannuation on the back payment (where required) RSPCA has also paid interest on the superannuation payment.

Q11: When will the payment be made?

Payments will commence to be made to affected staff on Wednesday 20th November 2024. Calculation will be based on the individual circumstances of each staff member and affected staff will be advised in writing of the details of their payment.

We are proactively contacting impacted former employees to confirm their banking details to arrange payment.   

Q12: What is the impact on my personal tax and other obligations?

If you are concerned about the impact, you should seek independent financial or tax advice or contact the relevant government authority such as Centrelink or Services Australia in relation to impact on payments such as child support.

Q13: Can I access more information about how I have been affected?

Of course. We are here to support you and we encourage open dialogue and feedback throughout the process. Please direct any queries to our People and Culture team at [email protected].

Q14: What do I need to do if I am no longer employed by RSPCA Queensland?

If you are an impacted team member, RSPCA Queensland will make every effort to contact you based on its records. Following contact, you will be asked to provide any relevant and essential identity and employment documents such as updated working rights, taxation, banking, and superannuation details. 

If you have not been contacted but would like to confirm your eligibility for a payment, please email [email protected].

If we are ultimately unable to contact former employees, then payments will be forwarded to the FWO as Unclaimed Monies and held on behalf of the employee.

Q15: Will PAYG be withheld from my back payment?

Yes, PAYG will be withheld from the back payment. The money you will receive in your bank account will be the amount after the PAYG has been deducted. Information about how much tax has been deducted will be shown on your payslip once the payment has been processed.

Q16: How will the PAYG on my back payment be calculated?

RSPCA applied to the Australian Taxation Office for a PAYG variation. This means that the ATO has advised that the PAYG should be withheld at a flat rate of 32% from the back payment.

Q17: Will PAYG be withheld from the interest paid on the back payment and is the interest taxable?

As the interest paid on the back payment is not salary and wages, RSPCA is not able to withhold PAYG from this payment. However, the interest paid on the back payment is a compensation payment and is taxable.

Therefore, you should declare the interest payment on the back payment on your income tax return for the financial year in which you receive the payment. As PAYG is not required to be withheld from the interest payment, you may owe tax on the assessment of your return.

Q18: Will I owe tax when I lodge my tax return?

Your back payment will be reported on your annual Income Statement in the tax year in which the back payment is paid. If any of your back payments are reported in the Lump Sum E box on your annual Income Statement, the financial year to which the back payments relate will also be reported to the ATO. 

When you complete your tax return, you will also need to report the Lump Sum E amount at item 24. Where the back payment reported at Lump Sum E would result in you paying more tax in the financial year then the amount of tax that you would have paid if the income had been reported in year in which the income was earned, the ATO will calculate a rebate or tax offset. The amount of the rebate or tax offset will depend on each individuals’ circumstances.  

The ATO will calculate this tax offset based on the information you include in item 24 of your tax return and based on your prior year tax returns. For more information please refer to the ATO website “Lump sum payment in arrears tax offsets”.

Following the lodgement of your tax return and depending on your personal tax circumstances in the current year and in the tax years in which you were underpaid, you may receive a refund from the ATO, or you may be required to pay additional tax to the ATO.

Unfortunately, we are unable to provide personalised financial or taxation advice because we do not know your personal tax circumstances. You may wish to consult a financial advisor or registered tax professional.

Q19: Will my back payment affect my other government payments/rebates?

Your back payment may have an impact on certain tax liabilities and rebates, including:
  • Liability to pay the Medicare levy
  • Government superannuation co-contributions
  • Low-income super tax offset and other tax offsets
  • Liability for the Medicare levy surcharge
  • The rate of repayment of Government loans such as HELP and SFSS
  • The private health insurance rebate, and
  • Div 293 tax.

In addition, your back payment can affect:

  • Child support obligations, and
  • Eligibility for family assistance payments such as Family Tax Benefits, Child Care subsidies and parental leave payments.

Individual circumstances vary, and we are unable to provide advice in relation to individual circumstances. Please contact the relevant agency if you require more details.

Q20: Will my payslip and Income Statement include the back payment amounts

Yes. The back pay will appear on your payslip and it will also be reported on your Income Statement for the financial year in which it is paid.

There are several different ways that the back payment may be reported on your Income Statement. We have outlined the ATO requirements for reporting the back payments below:

  • Back pay that relates to a period within 12 months of your payment date is reported as salary or wages
  • Where the payment is for a period greater than 12 months from the payment date and is less than $1,200 it will also be reported as salary or wages
  • Back pay that relates to a period more than 12 months from the payment date and is equal to or greater than $1,200 in total will appear as Lump Sum E on your Income Statement,  Where your back payment is reported as a Lump Sum E payment, RSPCA will also report the details of the amount of back pay that relates to each financial year.

When you complete your tax return, you will also need to report the Lump Sum E amount at item 24. Where the back payment reported at Lump Sum E would result in you paying more tax in the financial year then the amount of tax that you would have paid if the income had been reported in year in which the income was earned, the ATO will calculate a rebate or tax offset. The rebate or tax offset will be equal to the difference between the tax you would have paid had the income been reported in the year in which it was earned, and the amount of tax calculated in the current tax year.

The ATO will calculate this tax offset based on the information you include in item 24 of your tax return and based on your prior year tax returns. For more information please refer to the ATO website “Lump sum payment in arrears tax offsets”.

Q21. Will I need to lodge amended tax returns for previous financial years for my back payment?

No. There will be no requirement to lodge amended income tax returns as a result of the back payment. The back payment is reported in the income tax return in the year in which the back payment is made.

The back payment will be reported as either salary and wages or Lump Sum E in your income statement in the financial year in which the back payment is received. 

Where your back payment is reported as a Lump Sum E payment, RSPCA will also report to the ATO the details of the amount of back pay that relates to each financial year.

When you complete your tax return, you will need to report the Lump Sum E amount at item 24. Where the back payment reported at Lump Sum E would result in you paying more tax in the financial year then the amount of tax that you would have paid if the income had been reported in year in which the income was earned, the ATO will calculate a rebate or tax offset. The rebate or tax offset will be equal to the difference between the tax you would have paid had the income been reported in the year in which it was earned, and the amount of tax calculated in the current tax year. 

The ATO will calculate this tax offset based on the information you include in item 24 of your tax return and based on your prior year tax returns. For more information please refer to the ATO website “Lump sum payment in arrears tax offsets”.

For a detailed response regarding your personal tax affairs, please see an accountant and/or tax advisor.

Q22: Will I be receiving superannuation on the back payment of superannuation?

Any employer superannuation payable on the back payment has been calculated and will be paid into your nominated superannuation fund. Interest has also been paid on this superannuation contribution and has been contributed to your superannuation fund.  Both the superannuation on the back payment and the interest on the superannuation will be concessional contributions for the year in which the payment is made and will count towards your concessional contributions cap.

For more information on concessional contributions cap, refer to the ATO website “Concessional contributions and contribution caps”.

Q23: Will RSPCA also pay interest on my co-contribution?

Yes. RSPCA has also paid interest on your superannuation co-contribution. The interest on your co-contribution has also been paid to your superannuation fund. As the interest is a contribution made by RSPCA, it is treated as a concessional contribution.

Q24: Will this superannuation paid by RSPCA on the back payment including interest, impact my concessional contribution caps?

The superannuation contributed by RSPCA on the back payment and interest on the superannuation will impact your concessional contributions caps. If you are concerned about exceeding your concessional contributions cap, you should seek independent tax or financial advice.