Everyone who does business in New Zealand must pay ACC levies. This is, in effect, an extension of Australia’s WorkCover levy system.
Earners Levy
Every employee pays an ACC levy which covers them if they injure themselves at home, on the sports or out and about, this earners levy which is deducted as part of the PAYE withholdings covers them.
The New Zealand system is on a “no-fault” basis. Pretty much know matter how you injure yourself, you are covered.
New Zealand brought in this scheme back in the 1970s as a result of the significant delays in seeking compensation through the courts. Once ACC was brought in the ability to sue a third-party was removed.
At present the ACC earners living in New Zealand is deducted from employees wages at the rate of $1.21 per hundred dollars of liable income which has a ceiling.
Work Levy
The work levy covers employees in the workplace. For this reason it is assessed on the risk of the industry based on historical evidence. ACC keep very detailed records to assess the risk of various industries. Therefore, the industry is perceived more risky carry a higher work levy rate.
This levy is based on the payroll information provided to Inland Revenue which is then passed on to ACC.
Included in the employer levy is the “working safer levy”. This levy is there to fund the activities of WorkSafe New Zealand and is charged to all employers at a flat rate. This is currently 8c/$100 of liable payroll or income.
ACC Invoices
If you employ a New Zealand workforce you will receive an ACC invoice. As I mentioned earlier, this is based on your payroll information already provided to Inland Revenue so you don’t have to lodge any declarations or data to ACC. ACC invoices usually come out between July and August based on the previous years payroll.
The levy is based on the Business Industry Classification (BIC) code. If you operate as a company in New Zealand, you might want to check the code as it stands in the public records of the New Zealand Companies Office register. If that code is incorrect you can arrange to change it (or contact us if you are a client and we will handle it for you).
The information in this article is indicative only, not intended to be complete for all intents or purposes and does not constitute advice. It is recommended that you obtain professional advice, suited to your particular circumstances, from us before acting on anything you read.