Recommendation with Minister

Our new approach to levying self-employed people

We’re proposing to stop forecasting and instead calculate your levy based on your actual annual income. The Minister for ACC would like your feedback.

This proposal is now closed. Thanks for your feedback. We’ll have a decision from the Government in December.

If you’re self-employed, you pay the Work and Earners’ levies. We use these levies to cover accidents that happen at work and during everyday life, outside of work and off the road.

Proposed change to how we calculate your levy 

Self-employed customers receive an invoice for their levies after they file their income tax returns. We use the income from that return to calculate their levy obligation for the current year.

For new businesses, this can be confusing as the rules say we must base levies on the income earned in the year before you became self-employed. 

The current rules are not easy to understand and are hard to administer. Customers have said that they don't understand the current rules, where they're paying a levy for one year based on the previous year’s income.

The Minister for ACC is proposing to change the rules so that they align with basic tax rules. We would use the income from your tax return to calculate a levy for the same year.

The impacts of the proposal on ACC

This would mean that around $134 million would be collected a year later than it otherwise would have been. Not having this money would mean we miss out on the investment returns we would usually receive.

Missing out on $134 million in levies for the year 2020 will result in an ongoing loss of approximately $5.3 million per annum for the scheme.

Our investment income is a key way we keep the cost of the scheme as low as possible. The more income our investments bring the scheme, the less levies you pay.

The impacts of the proposal on you

  • Firstly, you won’t receive an invoice from ACC next year
  • Secondly, your income from the 2019 tax year will never be used to raise a levy. This is because the 2019 levy obligation was based on 2018 income which will be the old rules if this proposal goes ahead. And the 2020 levy obligation will be based on your 2020 income, which are the proposed new rules.

These changes won’t affect any entitlement to weekly compensation.

Should we address the delay by allowing you to pre-pay levies?

To address the loss of investment income the delay will cause, we’re considering introducing some form of pre-payment. It’s the same way Inland Revenue collects provisional tax during the year in expectation of a final tax liability.

Pre-pay options for paying your levies will help you to better plan for your levy obligations.

If this proposal is approved, we'd investigate a pay-as-you-go arrangement with any customers who wish to manage levies in a similar way to their tax obligations.

We'll have to introduce pre-payment rules

When looking at introducing changes to the way we collect money, we consider how other government agencies such as Inland Revenue, already do this.

If we were to introduce similar pre-payment rules, we’d have to:

  • align to Inland Revenue’s $2,500 threshold. It wouldn’t impact many levy payers as only 2% of levy payers have a levy bill of more than $2,500, or
  • we could set a lower threshold. This means introducing new, potentially complex rules for relatively small amounts of money and having different obligations than Inland Revenue.

More information

If you want more detail on this topic and the thinking behind what is being proposed, see the full consultation document.

The Minister for ACC consultation proposals for the 2019 to 2021 levy period
PDF 1.8 MB
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27 Sep 2018
Open for feedback

We were open for feedback from 27 September 2018 to 25 October 2018.

25 Oct 2018
Closed for feedback

The Ministry for Business, Innovation and Employment (MBIE) has reviewed your feedback. Thanks for telling us what you think!

Nov 2018
Recommendation with Minister

The Ministry for Business, Innovation and Employment (MBIE) has reviewed your feedback and based on what you've said they have made recommendations to the Minister.

Dec 2018
Changes confirmed

Based on your feedback and agreement from the Minister, the changes have now been confirmed. Have a look at the topic to see what has been agreed.