Accidents happen. But luckily in New Zealand, we’re all covered by The Accident Compensation Corporation’s (ACC) personal injury cover. That means if you have a mishap at home, work, or play, ACC may pay some of your treatment or rehabilitation costs.
The ACC is a unique, no-fault scheme, which applies no matter who causes the accident. Good news for those rainy days!
ACC levies are basically insurance payments, separate from general tax. The levies cover you against minor and serious injuries, but not general illness or health-conditions.
There are three types of levy that provide personal or business cover – Earners Levy, Work Levy, and Work Safer Levy. The ACC works by spreading the costs through the community and ensuring treatment is found as soon as possible. This means recovery is faster and employees return to work quicker – good news for individuals, businesses, and the economy.
- Earners Levy
Everyone who is paid a salary makes Earners levy ACC payments. This is insurance that covers the costs of treatment or rehabilitation for injuries that happen outside of work. From DIY accidents at home to injuries during sports games, don’t worry, you’ll be covered.
If you are a PAYE employee the Earners levy is deducted from your wages like a tax and for the self-employed, the ACC will send an invoice after your tax return has been filed.
- Work Levy
ACC Work Levy is paid by employers each year to cover injuries and accidents at work or that are work-related. This is a critical scheme for any business as it protects your people – priceless. The Work levy cost is different for every business as it depends on a range of factors. It must be paid by your business and cannot be deducted from employees’ wages or salaries. Pro tip: Budget! Don’t forget to put money aside to pay for your levies come the end of the tax year.
- Work Safer Levy
This levy, again paid by employers, goes towards WorkSafe New Zealand and helps fund their activities and injury prevention schemes across the country. The Work and Work Safer levies are both paid for via invoice from the ACC after taxes have been returned each year.
How much you have to pay
The current Earners Levy rate is currently $1.21 per $100 of your income. Everyone pays the same rate and there is no way to pay less.
For businesses, the Work Safe levy is a flat rate, currently $0.08 per $100 of your liable payroll.
When it comes to the Work levy, every business pays a different rate based on claims history, income, and level of risk in the workplace. ACC levies can be a significant business cost and you must put money aside to pay for them. Budget and ensure you pay on time – late or non-payment can mean you’re liable for significant penalties.
We are all looking for ways to save money, so the good news is The ACC automatically enrolls businesses into a No Claims Discount or Experience Rating Programme for the Work levy. This is an incentive to reduce the number of ACC claims a business makes which in-turn reduces the level of risk at their workplace and results in lower levy payments.
Things are slightly different if you are self-employed or a contractor. The ACC will automatically enroll you on the CoverPlus scheme – which is the equivalent of normal ACC cover. If you have an accident and can’t work, CoverPlus will cover 80% of your taxable income based on the previous financial year. If you want to change the amount you pay then you can opt-in to CoverPlus Extra. This allows you to pay a lower levy in exchange for a lower level of compensation. Just remember the less you put in, the less you’ll get back.
Want more advice on meeting your ACC payments? Our friendly and knowledgeable team are here to answer any queries and help you get the best deal for you and your business. Contact us today.