ACC Levy
Understanding the ACC Levy in New Zealand is essential for every business owner, employer, and self-employed individual. Managed by the Accident Compensation Corporation (ACC), this levy ensures that all workers are covered in the event of a workplace-related injury or accident.
This comprehensive guide will break down:
- How the ACC Levy works
- Who needs to pay it
- How it is calculated
- Key differences between employer and self-employed obligations
- How to reduce costs legally
- And everything else you need to stay compliant
What Is the ACC Levy in New Zealand?
The ACC Levy is a mandatory payment made by businesses and self-employed individuals to fund New Zealand’s universal accident compensation scheme. This scheme provides financial and medical support to people injured through accidents—whether at work, at home, or on the road.
Who Manages It?
- ACC (Accident Compensation Corporation): Provides insurance coverage and support.
- IRD (Inland Revenue Department): Handles income reporting and helps ACC determine who owes levies.
Why It Matters
- Ensures all workers have access to medical care and compensation.
- Keeps New Zealand’s public healthcare system sustainable.
- Legal requirement—non-payment can result in penalties.
How the ACC Levy System Works
Who Pays?
- Employers: Pay levies on behalf of their employees.
- Self-Employed Individuals: Pay based on their declared income.
- Contractors/Freelancers: Must register and pay directly.
What Types of Levies Exist?
| Levy Type | Who Pays It | Purpose |
|---|---|---|
| Work Levy | Employers | Covers workplace injuries |
| Earners’ Levy | All working individuals | Covers non-work accidents |
| Working Safer Levy | Employers | Supports WorkSafe NZ and workplace safety |
How Is the ACC Levy Calculated?
Calculating your ACC Levy correctly is critical. Here’s a step-by-step guide:
1. Determine Liable Income
- For employers: Total gross payroll of employees.
- For self-employed: Net income as filed with the IRD.
2. Find Your Industry Classification (BIC Code)
- Each business activity is assigned a Business Industry Classification (BIC) code.
- Each code has an associated risk factor, determining the levy rate.
3. Apply the Levy Rate
- Rates vary depending on the risk level of your work.
- E.g., a builder has a higher levy rate than a web designer.
4. Add Additional Levies (if applicable)
- Such as the Working Safer Levy and Earners’ Levy.
ACC Levy Calculation by Occupation
Here’s a breakdown of how different roles may be charged:
| Occupation | Liable Income | Levy Rate ($ per $100) | Working Safer Levy | Earners’ Levy | Total Payable |
|---|---|---|---|---|---|
| Builder | $85,000 | $1.85 | $0.08 | $1.21 | $2,998.60 |
| Electrician | $75,000 | $1.45 | $0.08 | $1.21 | $2,258.25 |
| Office Administrator | $60,000 | $0.68 | $0.08 | $1.21 | $1,176.60 |
| Freelancer (Writer) | $50,000 | $0.22 | $0.08 | $1.21 | $755.50 |
Note: The Earners’ Levy is applied to all income earners in New Zealand and is currently fixed at $1.21 per $100 of income.
Employers vs Self Employed: ACC Levy Comparison
Understanding your responsibilities based on your business role is key.
Comparison
| Feature | Employers | Self-Employed |
|---|---|---|
| Who Pays | Business owner | Individual |
| Based On | Total payroll | Net income |
| Invoicing | ACC sends based on IRD data | ACC sends after IRD submission |
| Earners’ Levy | Paid by employee directly | Paid by self-employed |
| Optional Cover | Not required | Available via CoverPlus Extra |
How to Read Your ACC Levy Invoice
Once you’ve filed your taxes, ACC sends an invoice.
What’s Included:
- Business activity and BIC code
- Liable income
- Levy rates and components
- Total amount due
- Payment due date
What to Check:
- Is your BIC code accurate?
- Is your income correctly reported?
- Are optional covers applied?
Using the ACC Levy Calculator
ACC offers a handy online calculator to estimate your levy.
Here’s how to use it:
- Go to the ACC Levy Calculator
- Enter:
- Your BIC code
- Income or payroll figure
- Review the breakdown
- Use it for budgeting and pre-tax planning
Chart: Estimated ACC Levy by Income and Risk
pgsqlCopyEdit| Income ($) | Low Risk Industry | Medium Risk | High Risk |
|------------|-------------------|-------------|-----------|
| 50,000 | $705 | $1,130 | $1,590 |
| 75,000 | $1,057 | $1,695 | $2,385 |
| 100,000 | $1,410 | $2,260 | $3,180 |
How to Reduce Your ACC Levy Legally
Paying less doesn’t mean breaking the rules. Follow these steps:
1. Double-Check Your BIC Code
- An incorrect code can lead to higher levies.
- Use ACC’s BIC finder to verify your business category.
2. Choose the Right Cover
- Self-employed? Consider CoverPlus Extra for agreed income coverage.
3. Apply for Reassessments
- If your income drops or you close your business, you may be eligible for a refund or adjustment.
4. Pay On Time
- Avoid penalties and interest.
ACC CoverPlus vs CoverPlus Extra
For self-employed people, choosing the right coverage plan is crucial.
What’s the Difference?
| Feature | CoverPlus | CoverPlus Extra |
|---|---|---|
| Income Covered | Based on actual income | Agreed amount |
| Premium Amount | Varies annually | Fixed |
| Application Required | No | Yes |
| Claims Payout | Based on last return | Guaranteed agreed income |
| Flexibility | Lower | Higher |
Pros & Cons
| Plan | Pros | Cons |
|---|---|---|
| CoverPlus | Automatic, no paperwork | Income must be verified |
| CoverPlus Extra | Fixed payments, guaranteed cover | Requires upfront setup |
For freelancers and contractors with fluctuating income, CoverPlus Extra offers peace of mind with a predictable safety net.
Recent Updates to ACC Levy Rates
ACC rates can change annually based on:
- Industry reclassification
- Government funding adjustments
- Injury rate trends
As of 2025:
- Earners’ Levy remains at $1.21 per $100
- Most risk classes have remained stable
- Digital services and gig workers face new classifications
Frequently Asked Questions (FAQs)
Final Thoughts
Staying informed about your ACC Levy obligations:
- Protects your employees or yourself
- Ensures compliance with New Zealand law
- Helps manage your financial obligations more effectively
Whether you’re running a large company or freelancing solo, understanding the ACC Levy New Zealand framework helps you avoid unexpected costs and stay safe.