ACC is something which is at the back of everyone’s minds that is until we get injured. Everyone (or almost everyone) know what ACC is, its insurance that covers you for accidents.

However, like any insurance ACC has different policies which provide different levels of cover. Below we explore how ACC works and what cover is right for you.

For employers

If you are an employer you automatically get covered under the workplace cover, this is the standard cover for employers.

The standard workplace cover covers you for:

• up to 80% of your employee’s salary while they can’t work
• subsidised medical care for your staff’s work-related injuries
• injury prevention schemes

What you pay for this workplace cover is dependant on the amount of wages you pay. Inland Revenue provides ACC with a summary of your payroll information and ACC uses this to calculate your levy and invoice you. The levy also depends on your industry classification so make sure this is correct with the IRD and ACC as more risky industries tend to have higher ACC levy rates.

Self-Employed (Sole-Traders, Contractors)

ACC CoverPlus is the default option for self-employed or a contractor. You are eligible for this cover as soon as you start your business and you are automatically covered.

ACC CoverPlus covers you for:

• up to 80% of your taxable income based on the most recently completed financial year.
• pays towards the cost of your treatment and rehabilitation.
• Compensation based on actual loss of earnings

Note: ACC CoverPlus does not pay you for the first week after your injury.

ACC CoverPlus Extra is available for Self-Employed and non-PAYE shareholder employees. You have to apply for this cover it is subject to underwriting approval.

ACC CoverPlus Extra covers you for:

• 100% of the agreed amount

Both CoverPlus and CoverPlus Extra cover you for:

• Fully paid emergency care and ambulance service
• Non-urgent surgery
• Payment towards medical fees including GP and physiotherapy
• Support services such as home help and childcare
• Support services to help your client return to work
• Lump-sum payments for permanent impairment
• Fatal injuries – cover for dependants and other death benefits

When does ACC invoice you?

• Employers and shareholder employees – every year based on your liable payroll filed with Inland Revenue. This invoice includes both your final levy and a provisional levy

• Self-employed and Contractors – this is usually after you file your income tax return

• New to Business – your first invoice will be triggered after you file your first tax return. This is usually in the second year of business.

Once you start employing staff it is important to know your responsibilities as an employer. Below is a quick overview of what you need to do.

The difference between an employee and a contractor?

An employee is a person employed to do any work for hire or reward under an employment agreement. The hire or reward is almost always a wage or salary. Employees have all minimum employment rights under employment laws.

Self-employed people are sometimes referred to as contractors, or independent contractors; these terms mean the same thing. A contractor is engaged by a principal to perform services under an independent contractor agreement.

Contractors are self-employed and earn income by invoicing the principal for their services. A contractor pays their own tax and ACC levies.

Registering as an employer

You can use your own IRD number if you are a sole trader or your business IRD number is you are a company to register as an employer.

Fill the Employer registration form IR334, you can do this either online through the IRD website or you can print, sign and post the completed form to your nearest Inland Revenue office.

Your responsibilities as an employer

When you employ staff, you are responsible for deducting the correct amount of tax and other contributions as per below from their wages and paying this to the IRD via the PAYE system.

• PAYE
• KiwiSaver contributions, unless they opt out of kiwisaver
• child support payments if any
• student loan payments if required

If any of your staff are members of KiwiSaver then you must pay your employers’ contribution to their fund. This is a minimum of 3% of their annual pay.

You also need to account for and pay Pay fringe benefit tax, if you supply fringe benefits, eg company cars or parking spaces, to your employees.

PAYE/PAYEDAY Filing

Depending on how often you pay your employees you will need to file PAYE returns and pay this to the IRD. You can read more about PAYDAY filing here.

Records you need to keep

You need to keep complete records for all employees, these include:

• Employment and contractor agreements
• Making sure all new employees fill in a Tax Code Declaration (IR330)
• All contractors fill in a Tax rate notification for contractors (IR330C) – if they don’t you will need to deduct tax from the payments made to them at the no-notification rate.
• Records of returns filed to the IRD. Employer deductions (IR345) and Employer monthly schedule (IR348)
• wage information (includes hours/days worked)
• copies of certificate of exemptions
• copies of special tax codes
• copies of special tax rate certificates.

All your pay records must be held in New Zealand for at least seven years.