'Liable earnings' is the term ACC uses to describe the part of your income from self-employment, on which ACC levies are payable. This is calculated using information from the IR3 tax return filed by a self-employed individual with Inland Revenue.
Liable earnings calculation
The full calculation for liable earnings looks like this:
- Income from withholding payments (Box 12B in your IR3 return)
- Plus total active partnership income (Box 18B)
- Plus income from self-employment (Box 22)
- Less expenses (Box 26)
If you also earn income as an employee, you are classified as a 'Mixed Earner', and this part of your income will also be included in your liable earnings calculation.
Minimum and maximum earnings
Levies are only payable on earnings up to the defined maximum.
If you are a 'full time' self employed person and earn less than the defined minimum, your levy will be calculated using the defined minimum level of earnings.
A self employed person that works on average less than 30 hours per week is considered to be 'part time'. A 'part time' self employed person pays levy on their actual earnings, the deemed minimum earnings level does not apply.
The annual minimum and maximum earnings are below:
Cover year ended 31 March |
Minimum earnings for self-employed under 18 years |
Minimum earnings for self-employed over 18 years |
Maximum earnings for self-employed |
|---|---|---|---|
2004 |
$11,960.52 |
$15,808.00 |
|
2005 |
$13,312.00 |
$16.640.00 |
$88,728.25 |
2006 |
$14,144.00 |
$17,680.00 |
$92,188.85 |
2007 |
$14,976.00 |
$18,720.00 |
$94,225.95 |
2008 |
$15,808.00 |
$19,760.00 |
$96,619.25 |
2009 |
$17,056.00 |
$21,320.00 |
$99,817.25 |
2010 |
$23,400.00 |
$23,400.00 |
$102,921.65 |
2011 |
$26,000.00 |
$26,000.00 |
$106,473.00 |
2012 |
$26,520.00 |
$26,520.00 |
$110,018.00 |
If you require information from a previous year, please contact the Business Services Centre on 0800 222 776.
Withholding payments
If an individual’s earnings have withholding tax removed, he/she is considered self-employed for ACC purposes, and is required to pay cover directly to ACC based on these earnings.
Unlike PAYE, ACC levies for an employee’s non-work injury cover are not deducted at source, and the employer does not pay levies to ACC to cover the employee for any work injuries that may occur.
This means people who are paid withholding payments must pay for non-work and work injury cover themselves.
Withholding payments are commonly paid to contract workers instead of PAYE.
Withholding payments are also often paid to (but not restricted to) workers in the following industries:
- forestry
- fishing
- construction
- agriculture, horticulture, and viticulture
- horse racing
- cleaning
- real estate (commission)
- company director’s fees
- entertainment
- examiners (Bursary, NCEA etc)
- freelance journalism/writing
- gardening/turf management
- modelling.
Last updated: 1 April 2011