Income that you receive from personal effort is liable for ACC earners’ levy. This levy is charged to cover the cost of rehabilitation and compensation following non-work related injuries.
Your ACC Premium consists of:
- ACC Workplace Cover Levy – your classification unit rate x each $100 of liable earnings.
- Residual Claims Levy – your residual claims levy rate x each $100 of liable earnings.
- Health and Safety in Employment Levy – 5c x each $100 of liable earnings.
The Classification Unit Rate is based on the actual cost of work-related injuries that occur within your classification unit. A classification unit is a group of businesses that operate within a similar industry.
The Residual Claims Levy Rate covers ongoing costs for old injuries that occurred before 1999. In 1999 the ACC funding was changed to cover the full lifetime costs of injuries that occurred in that year. The Government announced in September 2015 that the Residual Claims Levy will cease from April 2016.
Income liable for earners’ levy includes:
- Salary and wages (overtime, backpay, holiday pay, long service leave, bonuses or gratuities and taxable allowances)
- Shareholder-employee salaries
- Salaries to partners in a partnership
- Salary or wages to owners in a look-through company (LTC)
- Active income from a look-through company
- Income from self-employment.
The IRD provide ACC with relevant earnings data from employer monthly schedules. From this information, ACC calculates the total levies due.
Premiums are calculated and paid as follows:
Employees
All employees must pay ACC earners’ levy. This is built into the PAYE tables and is deducted along with PAYE.
Self-employed
ACC invoices you directly for earners’ levy. The IRD supplies income information to ACC to enable them to do this based on your tax returns filed with the IRD.
Shareholder employees
If you receive a regular salary with PAYE deducted then the company deducts earners’ levy as part of your PAYE.
If you receive an irregular salary with no PAYE deducted then ACC invoices the company directly for earners’ levy, which is supplied from the IRD to ACC based on the tax returns filed with the IRD.
Employer invoicing by ACC takes place from June each year and is based on employee earnings for the year ended 31 March.
For more information on ACC premiums just give us a call us to ensure you are minimising your payments while still maximising your coverage in line with your insurance coverage.
