How can I reduce my ACC levies?

by The Findlaw Team

Every employer, self-employed person, and earner pays an ACC levy to cover the cost of injuries under New Zealand’s accident compensation scheme.
These levies can be a significant business cost, but there are ways of reducing them. This article describes the various schemes available.

Can employees reduce their levy?

If you are an employee who has income tax (PAYE) deducted from your pay, your ACC levy is included in that tax. This earner’s levy goes towards the cost of injuries that are not work-related (and not motor vehicle related).

The earner’s levy is a set rate and all employees pay the same rate (1.7 percent including GST in the 2013/14 tax year).

However, there is no way of decreasing this levy.

How can employers and self-employed people reduce their ACC levies?

One of the key aims of the relevant legislation, ie the Accident Compensation Act 2001, is to prevent injuries from occurring in the first place. For this reason, the accident compensation scheme includes various financial incentives for employers and the self-employed to improve their health and safety practices.

Both employers and the self-employed pay a work account levy (self-employed people also paid the flat-rate earner’s levy). The work account levy covers the cost of injuries suffered at work. ACC’s name for the work account levy is “WorkPlace Cover Levy”.

The levy rates vary depending on the industry classification and correspond with the cost of claims from each particular industry. For example, the levy rate for an accountancy practice will be significantly lower than the levy rate for a forestry business.

Each year, the levy rates are set by the Accident Compensation (Work Account Levies) Regulations. These come into force on 1 April each year.

In the broadest sense, there is an incentive at industry level to reduce the number and cost of claims injured workers make to ACC, in the hope that this will lead to a lower rate for their particular classification unit.

There are other schemes and incentives in place for individual employers and self-employed people, and these are outlined below.

Workplace Safety Management Practices

Under the Workplace Safety Management Practices (WSMP) scheme, the work account levy may be reduced if the employer or self-employed person passes an audit of its safety management practices. The audit must be carried out in accordance with the audit tool approved by ACC.

Although any business can participate in the WSMP scheme, ACC says that it is more suited to larger businesses that employ more than 10 full-time staff and whose annual payroll exceeds $450,000.

The possible levels of levy reduction under the scheme are:

  • 10% if the employer or self-employed person satisfies an audit to a primary level;
  • 15% if the employer or self-employed person satisfies an audit to a secondary level; or
  • 20% if the employer self-employed person satisfies an audit to a tertiary level.

Before applying to ACC for an audit, the employer or self-employed person must carry out their own audit of their safety management practices and believe that they would pass the ACC audit.

In this is the case, then an independent audit will be carried out by an approved auditor at ACC’s expense.

If an employer or self-employed person fails the ACC audit, they cannot re-apply for another 12 months.

ACC can make an employer or self-employed person who has received a discounted levy undergo another audit if:

  • There is a fatal or serious injury at the workplace;
  • There is a cluster of injuries at the workplace;
  • ACC receives complaints about safety standards at the workplace; or
  • There has been a change of ownership or control of the business.

Workplace Safety Discounts

Under the workplace safety discount scheme, small businesses and self employed people can apply for a 10 percent discount on their levy. The scheme is available to businesses that have liable earnings of $537,000 or less, or have 10 or less full-time employees.

The scheme was previously only available to certain high risk industries (agriculture, forestry, construction, road transport, waste management, motor trades, and fishing), but on 1 April 2013 it was extended to all small businesses and self-employed people.

To qualify for the discount, applicants must complete a self-assessment form showing they have appropriate experience and current practices in areas such as:

  • Hazard identification and management;
  • Incident and accident investigation;
  • Employee training in health and safety matters; and
  • Emergency management procedures.

This experience can be gained on-the-job, or through a health and safety training course. If businesses need help sourcing appropriate training or developing appropriate workplace safety practices, ACC can point them in the right direction.

ACC-approved auditors will check applications and some workplaces may be asked to complete a phone or on-site audit to confirm that they qualify for the levy discount.

ACC can increase your levy too!

The Accident Compensation Act 2001 allows ACC to increase an employer’s levy if they have a consistently poor workplace safety record.

ACC monitors injury records and may require employers to undergo an audit under the Workplace Safety Evaluation Programme.

ACC must increase an employer’s levy by 50 percent if the audit shows that the workplace does not meet the standards required. The levy increase must be based on an audit of the employer’s safety management practices carried out:

  • At worksites chosen by ACC;
  • On reasonable day(s) chosen by ACC;
  • By an auditor chosen by ACC; and
  • In accordance with the upward audit tool.

Once an employer has had their levy increased, ACC must arrange further audits of the employer’s safety management practices. These must be carried out no more than once a year, and must continue until the employer passes an audit.

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