Recommendations to the Minister

Should we change how retail and wholesale trade businesses are classified?

Proposed changes would simplify how non-store and commission-based retailers are classified and result in fairer levies for those businesses.

Classification of retail and wholesale trade businesses

The way retail and wholesale traders are classified currently is unnecessarily complicated.

We’re therefore proposing several changes to simplify how we classify these businesses. We believe this will better reflect the current New Zealand trading environment and improve a business’s ability to select the correct CU.

The scope of these proposals includes:

  • non-store retailers, such as those with an online store, market stall or telemarketing sales
  • commission-based sellers and traders who do not store or handle goods.

Proposed changes for non-store retailers

Non-store retailers, such as those with an online store, market stall or in telemarketing, currently pay a flat levy rate of $0.34. However, store-based retailers are classified based on the products they sell, so pay different levy rates (currently between $0.12 and $1.52[1]). 

This means an online book retailer and an online furniture retailer pay the same levy rate. However, a store-based book retailer and a store-based furniture retailer pay different levy rates that reflect past injuries for similar businesses. 

In the 2018 levy consultation, we received feedback from submitters that: 

  • this distinction should no longer exist  
  • online retailers should be classified based on the products or services they sell, instead of the channel they use to reach their customers.  

We agree with this approach as it aligns the levy to the level of risk in handling different types of goods. We also believe this approach better reflects the greater uptake of contactless sales methods being used by businesses. 

[1] The retailing CU with the lowest levy rate is 52510 Pharmaceutical, cosmetic and toiletry goods retailing, while the retailing CU with the highest levy rate is 52592 Firewood, coal and coke retailing.

What it might mean for you

For businesses who are moving to a different CU, there are two impacts on levy rates to consider: 

  1. The impact of moving to a CU with a different risk rating and therefore levy. 

Based on the current prescribed levy rate, we estimate 900 non-store businesses, including online furniture retailers, supermarkets and other food retailers, would move to a higher risk-rated CU.  

However, 1,200 businesses would move to a lower risk-rated CU, with 550 businesses likely to remain in a similar risk group to what they are now. 

Our analysis shows this change would not have an impact on the overall levy rates for the retailing CUs that these businesses move into.  

2. The impact of updating claims experience and aggregate rates.  

ACC is also consulting on proposed changes to levy rates. Through this review, levy rates for each CU are updated to reflect any changes in the claims patterns of businesses. 

This means levy rates for some businesses will increase or decrease, consistent with their recent claims history.

How it would work

Our proposal would mean the 1,500 businesses and 1,200 self-employed who operate exclusively by non-store methods would be reclassified depending on the products they sell.

CU number CU name Proposed change
52595  ‘Non-store retailing’ 
  • Disestablish CU
  • Reclassify businesses depending on the products they sell 
52590  ‘Store-based retailing (not elsewhere classified)’ 
  • Rename CU as ‘Retailing (not elsewhere classified)’ 

Proposed changes for commission-based sellers and traders who do not store or handle goods

Retail and wholesale commission-based sellers share a similar risk profile, but the current distinction between them is unnecessarily complex.

We therefore propose removing the retail and wholesale distinction for these businesses.

What it might mean for you

This proposed change would simplify the options for businesses when they select their CU and result in these sellers paying a comparable rate.

This would affect businesses such as:

  • a commission-based cosmetics seller who sells to pharmacies
  • an online seller of sporting goods, who organises for overseas manufacturers and freight companies, to produce and dispatch their products directly to the consumer – this includes businesses who do not store or handle goods directly (i.e. drop-shippers).

How it would work

Our proposal would result in the changes shown in the tables below.

Classification units (CU)
CU number CU name Proposed change
52597  ‘Retail commission-based buying and/or selling’ 
  • Disestablish CU
  • Move businesses to CU 47991 (below)
47991  ‘Wholesaling – commission-based or excluding storage and handling of goods’ 
  • Rename CU to ‘Trading – commission-based or excluding storage and handling of goods’ with a new levy rate of $0.17
  • Businesses in CU 52597 move to this CU
Levy risk group (LRG)
LRG number LRG name Proposed change
331 ‘Commission-based Wholesaling’ 
  • Rename LRG to ‘Commission-based Trading’ 
1 Sep 2021
Open for feedback

Tell us what you think about our proposals.

5 Oct 2021
Consultation closes

We’ll review and consider all feedback submitted to us.

Nov 2021
Recommendations to the Minister

Taking account of what you tell us, we’ll make recommendations on levy rates to the Minister for ACC.

Dec 2021
Final decisions by Government

The Government will make the decision on final levy rates, which will take effect next year and be in place for three years.