As a business owner or self-employed individual, you have probably heard of the ACC Earners Levy and are aware that you need to pay it each year. But what exatly is the ACC Earners Levy and how does it work? In this blog post, we delve into this topic to provide you with an in-depth overview of the levy and how it may affect your business.
The ACC Earners Levy is an insurance scheme that provides cover for employees who suffer from a workplace injury or illness. It is paid by employers on behalf of thir employees and covers both medical costs and lost wages due to an injury or illness caused by work-related activities. Employers must deduct the levy from their employees’ wages each pay period, as well as making a payment themselves. The amount of the levy depends on the industry rate applicable to each employer and can range from 0.5% – 1.7%.
In addition to paying the levy, employers must also ensure that they have adequate safety practices in place in order to minimise workplace injuries and illnesses. Under New Zealand’s Workplace Safety Management Practices (WSMP) scheme, employers can reduce their work account levy if they pass an audit of their safety management practices in accordance with ACC’s approved audit tool. This includes having risk management processes in place, providing regular safety training for staff members, investing in personal protective equipment where necessary, and following safe working procedures at all times.
It is important to note that any payments made towards the ACC Earners Levy are tax deductible for both employers and employees alike. This means that you can claim back any contributions made towards this insurance scheme when filing your annual tax returns, which could result in considerable savings over time.
By understanding more about the ACC Earners Levy and putting measures in place to ensure safety standards are met within your organisation, you can ensure that your business remains compliant with relevant regulations while also providing comprehensive cover for your staff members if they are injured or become ill due to work-related activities.
Is the ACC Earners Levy Tax Deductible in New Zealand?
Yes, ACC earners levy is tax deductible in New Zealand. This levy is paid by employers and employees, and the rate varies depending on your industry classification. For example, if you are a self-employed individual, the rate is curretly $1.39 per $100 of gross earnings. If you are an employer with employees, the rate is currently $1.27 for every $100 of payroll subject to ACC cover. The levy can be deducted from your income when you file your tax return and will be calculated based on your total gross earnings for the year. It is important to note that the earner premium payable by shareholders in a company is not tax deductible.
Source: commonwealthfund.org
Do New Zealanders Have to Pay ACC Levies?
Yes, all New Zealanders have to pay an ACC levy. As a small business owner, you will need to pay an ACC Work levy annually in order to provide cover for yourself and your employees. Additionally, you will need to deduct the ACC Earners’ levy from your employees’ wages. If you are a contractor or self-employed, then you will also be required to pay an ACC levy each year.
Reducing ACC Levy
If you want to reduce your ACC levy, you should cosider participating in the Workplace Safety Management Practices (WSMP) scheme. This scheme allows employers or self-employed persons to potentially reduce their work account levy if they pass an audit of their safety management practices.
In order to be eligible for a reduction in the levy, you must carry out the audit in accordance with the audit tool approved by ACC. This means that you will need to assess your existing safety management practices and make any necessary changes or improvements that are recommended by the audit. These improvements could include implementing a health and safety system, providing health and safety training, or conducting regular risk assessments.
Once you have completed the audit and made any improvements recommended by it, you can then submit your results to ACC for review. If ACC finds that your safety management practices meet ther standards, then your work account levy may be reduced as a result.
It is important to note that passing the audit does not guarantee a reduction in your levy – this decision is ultimately up to ACC. However, it is worth considring participating in the WSMP scheme if you want to potentially reduce your ACC levy.
Who is Responsible for Paying the ACC Earners Levy in New Zealand?
The ACC Earners’ Levy is an income tax that all employees and self-employed people in New Zealand must pay. It is collected by the Inland Revenue Department (IRD) and pays for the no-fault accident compensation cover provided by the Accident Compensation Corporation (ACC). The levy is applied to your gross salary, wages or income from self-employment, before any deductions such as tax and KiwiSaver. The levy amount you pay depends on your particular situation, so if you are employed or self-employed it’s important to make sure you understand how the levy affects your individual circumstances.
Income Subject to ACC Levy
ACC levy is a payroll tax on all employees’ income, including salary and wages. The levy is calculated as a percentage of an employee’s total liable earnings, which are their gross income minus any deductions for benefits such as KiwiSaver contributions and student loan payments.
The amount of income liable for ACC levy is determined by the start date of the financial year. For the 2020-2021 financial year, the maximum liable income for employees is $130,911. For the 2019-2020 financial year, this amount was $128,470; for 2018-2019 it was $126,286; and for 2017-2018 it was $124,053.
Employers must calculate the total amount of ACC leviable income for each employee in a financial period and apply the apropriate rate based on their industry. The current standard rate of ACC levy is 1.39% of an employee’s liable earnings up to $128,470 in any one financial year (the 2020/21 maximum). Any amount over this threshold will be taxed at 0%.
Calculating the ACC Levy for an Employee
The ACC levy for an employee is calculated by multiplying their liable payroll or income by 0.08%. For example, if an employee earns $50,000 per year, the ACC levy would be $400 (50,000 x 0.08%). It’s important to note that the rate of 0.08% is a flat rate, meaning all employees are subject to it regardless of their salary.
What Is the Meaning of an ACC Levy?
ACC levies are a compulsory payment made by employers to the Accident Compensation Corporation (ACC) in New Zealand. This levy helps fund the ACC’s no-fault scheme, wich provides financial support for people who have had an accident resulting in injury or death.
The levies cover medical costs, rehabilitation costs and ongoing support for those affected. They also povide compensation for lost wages and other expenses such as funeral costs. Employers must make an annual payment based on their total number of employees, as well as any other factors that may affect the levy rate.
The levy is designed to cover the cost of injuries sustained by current and previous employees that occur both on and off the job. This means that if an employee has an accident at work, they will receive income compensation at a rate of 80% of their current earnings, regardless of who was at fault.
The ACC levy system is designed to ensure that everyone in New Zealand is protected from unexpected accidents, whether they are on or off the job. It helps employers by providing them with peace of mind that their employees will be taken care of if something goes wrong, thereby reducing their risk exposure and ensuring a safer working environment for everyone involved.
The Consequences of Owing Money to ACC
ACC levies are an important part of New Zealand’s health and safety system, as they help fund the treatment and support of those who are injured in accidents. They also provide financial assistance to those who can’t work due to a work-related injury or illness.
When you pay ACC levies, this money is used to cover the costs associated with providing medical treatment, rehabilitation services and other support for people who are injured in accidents. It also helps to reduce the impact of injury on individuals and their families.
Your ACC levy payments will depend on whether you are an employee, self-employed or an employer. Employees have ACC levies deducted from thir wages each pay period and employers pay a portion of their payroll taxes towards ACC levies. The self-employed are responsible for paying their own ACC levies.
If you owe money to ACC it is because you have not paid your required amount of levies for that year or period. It is important to make sure that your levy payments are up to date in order to prevent having to pay additional fees or interest charges.
The Impact of Increased ACC Levies
Yes, ACC levies have increased. From April 2021, earners’ levies paid through PAYE (or invoiced directly through ACC for self-employed people) will increase from $1.21 per $100 to $1.27 per $100. This rate will then increase further to $1.33 in 2023 and again to $1.39 in 2024.
Tax Implications of ACC Payments
Yes, you do pay tax on ACC payments. ACC payments are subject to the same tax rules as wages or oter income. Any taxes due will be deducted from your payments according to the rates set by the Inland Revenue Department. You may need to provide a tax code declaration and statement of earnings when you register for ACC payments in order to ensure that the correct amount of taxation is deducted.
What Is Not Covered by ACC?
ACC does not cover any illness, sickness or contagious diseases such as measles, nor does it cover stress, hurt feelings or other emotional issues. However, if these issues are linked to an injury that is covered by ACC then they may be eligible for assistance. ACC primarily covers physical injuries from accidents that take place in New Zealand. This includes injuries sustained wile playing sport and at work. It also provides financial assistance for medical treatment and rehabilitation costs associated with the injury, as well as weekly compensation for lost earnings due to the injury.
Conclusion
In conclusion, the ACC Earners Levy is a tax-deductible payment for all New Zealanders. This levy helps to protect employees and employers through provding cover for workplace injuries or accidents. It is important to be aware of your classification/industry rate and how much % per $100 you will pay in ACC levies, so that you can plan effectively for when the invoice arrives. Additionally, employers may be eligible to have the work account levy reduced through successfully passing a safety management audit with ACC.
