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All workers and businesses in New Zealand pay ACC levies. These levies provide cover for all sorts of injuries, including those that happen outside of work. As a small business owner, you have to pay an ACC work levy and working safer levy each year. You also need to deduct the ACC earners’ levy from your employees’ wages. If you are a contractor or self-employed, you will also pay ACC every year to cover you for work and non-work-related injuries. This article will help you understand what levies you are required to pay as an employer or self-employed and how to pay them.

What Is ACC?

The Accident Compensation Corporation (ACC) is the New Zealand government entity that manages the no-fault accidental injury compensation scheme. ACC covers some or all of the medical costs associated with injuries and accidents that happen in New Zealand, no matter how the person got injured or whose fault it was.

Paying Levies as Self-Employed or Employer

If you employ staff, your business will pay a work levy and working safer levy to ACC. Your work levy funds cover for work-related injuries and accidents. This levy is normally tailored to your business, based on:

  • the risk of injury at work;
  • the cost to the scheme; and
  • your liable income or payroll.

The working safer levy goes towards supporting WorkSafe New Zealand’s activities and injury prevention across the country. This is a flat rate, currently $0.08 per $100 of your liable payroll or income. This information can change with updates in government policy so always refer to the ACC website.

If you are self-employed, a shareholder-employee or a contractor, you have to pay an earners’ levy in addition to the work levy and working safer levy.

Tip: When you start as a sole trader, you are automatically added to ACC’s CoverPlus, but you can choose to upgrade to CoverPlus Extra. With CoverPlus Extra, you can decide how much of your income you want ACC to cover, and thus lower your levies.

How to Pay Your ACC Levies 

When you file your tax return and Employer Monthly Schedules with Inland Revenue, ACC receives your income and payroll details. Based on this information, they send you an invoice with the amount to pay. You can try to estimate your levy in advance using the ACC’s levy estimator. You will need:

  • your business description (or ACC classification unit);
  • how much you pay your employees; and
  • your claims history (the number of work-related injury claims your business has made).

When you submit a tax or GST return, you choose a Business Industry Classification (BIC) code based on your main work activity. ACC uses this BIC code to assign your business a classification unit. Your ACC’s classification unit is an indication of the levels of risk for your business and decides the levy rate you pay.

Not all of your earnings are liable for ACC. For example, holiday pay and overtime are liable, but redundancy and retirement payments are not. This depends on how much you pay your employees. You can find out more details on the Inland Revenue website.

Tip: As a business, you will automatically join the No Claims Discount or the Experience Rating Programme, depending on how much your work levy is every year, over a three year period. This can help you reduce your ACC levy if you meet certain criteria. 

Deducting Levies From Your Employees’ Wages 

If you have employees, you have to deduct ACC earners’ levies from their pay, based on how much they earn. This is part of their PAYE deductions. The ACC earners’ levy covers your employees for injuries that happen outside of work. If your employee gets injured at work, you have to pay their first week of wages. Otherwise, you can agree to whether they can use their sick leave or annual leave while they are away from work.

Key Takeaways 

The ACC scheme provides financial compensation and support to citizens, residents, and temporary visitors who suffer personal and work-related injuries in New Zealand. When you employ staff, you need to pay several levies to ACC, as well as deduct levies from your employees’ wages. After filing your tax return and Employer Monthly Schedules with Inland Revenue, you will receive an invoice from ACC with the amount you owe. If you are self-employed, you can choose to change your ACC cover to CoverPlus Extra, to decide how much of your income you want to cover and lower your levies.

If you need help understanding your ACC obligations or meeting your employer obligations, LegalVision’s employment lawyers can help. Call 0800 005 570 or fill out the form on this page.

Frequently Asked Questions

Who pays ACC levies NZ?

Everyone in New Zealand has to pay ACC levies. As a small business owner, you have to pay a work levy and working safer levy each year, as well as deduct the earners’ levy from your employees’ salaries and wages. If you are self-employed, a shareholder-employee or a contractor, you have to pay an earners’ levy in addition to the work levy and working safer levy.

How do I pay my ACC levies?

Once you file a tax return, you will receive a levy invoice from ACC by post. There are many ways to pay, including by credit card (a small fee applies); self-service (MyACC for Business); internet banking; direct debit or by instalments; or in person. Your invoice will specify the due date. You should keep your industry code up to date, as higher injury risk businesses pay higher ACC levies.

Is ACC a business expense?

ACC levies are part of the costs you incur in the day-to-day running of your business. These levies are all tax-deductible except the earner premium payable by shareholders in a company.

Do employees accrue annual leave while on ACC?

Yes. If your employees are receiving long term ACC payments, you will need to continue to accrue annual leave for this period.

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