All businesses pay ACC levies. All employees have ACC levies deducted from their wages. All contractors and those who are self-employed also pay ACC levies. But what exactly are these levies, and can I pay less? Let’s take a look…
What Are ACC Levies?
ACC levies are collected by the Accident Compensation Corporation or ACC. They are a crown entity which is responsible for administering New Zealand’s no-fault accidental-injury scheme. This means that ACC will pay the cost of medical treatment for an accidental injury, including help at home or work and income assistance. It also places a huge focus on injury prevention, funding campaigns to educate and inform individuals and workplaces about risks and how to reduce them.
There are three different types of levies which you may be paying, depending on circumstances:
- The Earner’s levy is put by ACC into the Earner’s Account. It is from here that any costs associated from accidents which occur doing everyday activities are paid from. This account also contributes to the Treatment Injury Account.
- If you receive a wage, you are paying an Earner’s levy. Your employer will deduct this from your wage and pay it to ACC on your behalf. Non PAYE shareholder-employees and those who are self-employed will be sent an invoice directly from ACC after they have filed a tax return.
- The Work levy funds cover for injuries and accidents which are work related or occur at work. The work levy amount differs between businesses depending on the injury risk, cost to the scheme and your liable income. The risk of injury at work does vary between businesses, which is why factory work is assigned a higher levy rate than an office worker, for example.
- The work levy is payable by those who are self-employed, a shareholder-employee, a contractor or an employer with staff. It will be sent via invoice from ACC after filing a tax return.
Working Safer Levy
ACC collects this levy on behalf of WorkSafe New Zealand. All funds are used to help WorkSafe promote safety and injury prevention. Once again, you will receive an invoice for this.
How Do I Know How Much My ACC Levy Will Be?
The ACC website has devoted an entire page to this. On it you will find information about how they calculate levies, information you need to gather first, the dollar amounts of income you’ll pay levies on, the current levy rates and a levy calculator (depending on the type of cover you have).
Cover, I hear you say. What cover?
ACC has two types of cover for both those who are self-employed and those who have a business. The cover you choose affects the dollar amount of ACC levies you will pay, as well as the compensation you will receive if you can’t work.
A self employed person has the choice of:
- CoverPlus – which pays up to 80% of your income based upon the past financial year. You will be automatically assigned this cover type.
- CoverPlus Extra – which pays 100% of an agreed cover, up to 100% of your income for the past financial year. This is an optional product you need to sign up for.
As a business, you have the choice of:
- Workplace Cover – payable by employers and shareholder-employers. Workplace cover is automatically assigned and will provide fund to pay for employees medical care and up to 80% of their salary if injured at work.
- Accredited Employers Programme – this is an optional product which you need to apply for. It basically means you are the one responsible for managing injuries and claims employees make if injured at work. This can save you up to 90% off your work levy.
Calculators for all of these options can be found on the ACC website.
How Can I Pay Lower ACC Levies?
Is it even possible to pay smaller ACC levies, or am I stuck with a set amount because of the income on my tax return, or business type?
Yes, it is possible and it all comes down to choices. Unfortunately, if you are an employee though, your levy is set and automatically deducted from your salary. There is no way to reduce it.
Above I listed the four types of ACC cover: CoverPlus and CoverPlus Extra for those who are self-employed, and Workplace Cover and the Accredited Employers Programme for businesses.
You or your business are automatically assigned either CoverPlus or Workplace Cover by default. By choosing CoverPlus Extra or applying for the Accredited Employers Programme, you can significantly cut your ACC levies.
For the self-employed, this is done by negotiating a lower amount of compensation should you have an accident which makes you unable to work. Less compensation means lower levies. You then use the savings to take our private insurance cover, which can cost less and cover more than your ACC levy would.
A business can apply to join the Accredited Employers Programme. It’s not as simple as saying you’ll join just to pay lower levels, although that is a significant benefit. There are plenty of responsibilities you’ll need to meet, as well as certain things you must demonstrate, which are listed on the ACC website. These include things such as having documented proof of your workplace health and safety programs, having the policies and procedures in place and the ability to meet the costs of your employee’s cover and treatment.
The benefits of joining include being able to save 90% off your work levy, you can limit your financial liability, you can prevent injuries when good health and safety practices are in place and you can have a larger role in the recovery of an employee.
On risk is that you may be liable to support an employee or their family for the life of the claim if a fatal or serious injury occurs. You could also end up paying more in managing your claims and injuries than if you had paid the default levy.
Should you need advice on managing or paying your ACC levies, We can assist with this. For assistance in providing private insurance for either yourself or your business should you choose CoverPlus Extra or the Accredited Employers Programme, we can help. We’ll work with you to find an affordable way to lower your financial risks should the worst happen. Get in touch to book a time with us today for a chat.