This page provides an overview of ACC levies, with information on how levies are made up, what they cover, who pays for what and how levies can be reduced.
Levies overview
All payments to ACC for personal injury cover are called levies. Cabinet sets levy rates each year, which runs from 1 April to 31 March.
Almost 85% of the levies collected are used to pay for the costs of claims, with the rest funding the cost of injury prevention programmes and operating the ACC scheme (including levy collection).
To calculate our levies we review the past claim histories, forecast how many claims we will get next year and what they will cost (not only the next year but until each claim is closed, which is dependent on the severity of the injury), and consult on recommended levy rates. The final decision is made by the government.
Levy components
Levies are made up of two components, covering:
- Claims for the year ahead
This component provides funds for the lifetime costs of injuries that will occur during the coming year. - Claims made before 1999 (called residual portion of levies)
In addition to funding the costs of the current year’s injuries, levy payers also pay a residual portion of levies for pre-1999 claims levy component included in the Work Account, Earners’ and motor vehicle levies.
We also include a funding adjustment to allow for any surplus or shortfall in our estimate of the ongoing costs of claims for injuries that happened after 1999.
Understanding the levies that your client has to pay
We set and collect levies from employers, self-employed people, earners, motor vehicle users and Government.
Work-related levies
All employers and self-employed people must purchase personal injury insurance from ACC to cover accidents in the workplace and some work-related diseases and gradual process conditions. We charge these levies against every $100 of liable earnings and set a work levy rate for different types of business, based on:
- how much your client pays their workers, or receives via liable earnings
- the number and cost of injury claims that their industry has had in the past
- the number and cost of injury claims that we think their industry will have in the coming year.
Non work-related levies
Earners, self-employed people and motor vehicle users are required to pay levies to cover the costs of injuries that happen outside the workplace. The Government pays for the costs of personal injury cover for non-earners, such as children and retired people, and contributes to the funding required for personal injuries caused by medical treatment.
Earner levies
Earner levies fund ACC cover for the non-work personal injuries of employees and the self-employed. Earner levies also contribute to the funding required for personal injuries caused by medical treatment.
Your client pays earner levies through PAYE, or they will be included on the annual ACC invoice if your client is self-employed or a shareholder-employee receiving a non-PAYE salary. The amount of their levy is based on how much they are paid.
Motor vehicle levies
Motor vehicle levies fund ACC cover for all injuries involving moving vehicles on public roads in New Zealand. Levies are paid through annual vehicle licence fees and through a levy on each litre of petrol you buy.
The amount of the levy is based on the type of vehicle owned and the type of fuel used (eg petrol or diesel).
A summary of who pays for what
The levies and government funding are collected via six ‘accounts’. Each account must fund the costs of injury for the group it covers. These accounts are:
ACC Account |
Who funds it |
What's covered |
Entitlements |
|---|---|---|---|
Current portion of the Work Account |
Employers (based on the liable earnings of their employees) self-employed and private domestic workers (based on their liable earnings) |
Work-related personal injuries affecting employees, the self-employed and private domestic workers |
Medical and dental treatment income replacement (lost earnings compensation) elective surgery rehabilitation (including aids and appliances, home and vehicle modifications) transport costs, home help and help getting a job lump sums and death-related entitlements for surviving spouses and children |
Residual portion of the Work Account |
Employers (based on the liable earnings of their employees) self-employed and private domestic workers) based on their earnings) |
The continuing cost of work-related personal injuries (pre-1 July 1999) and non-work-related injuries to earners (pre-1 July 1992) | |
Current portion of the Earners’ Account |
Employees, self-employed and private domestic workers (based on their earnings) |
Non-work injuries (eg at home or during sport and recreation) suffered by people in the paid workforce | |
Residual portion of the Earners’ Account |
Employee, self-employed and private domestic workers (based on their earnings) |
The continuing cost of non-work injuries to earners that happened between 1 July 1992 and 30 June 1999 | |
Motor Vehicle |
Motor vehicle owners and users (through an annual vehicle levy and a petrol levy) |
Personal injuries involving motor vehicles on public roads (except those covered by the Work Account) | |
Non-Earners |
Government |
Personal injuries suffered by people not in the paid workforce (eg students, beneficiaries, children, retired people) | |
Treatment Injury |
Earners (through earner levies) and Government |
Personal injuries caused by medical treatment |
How can my client reduce their levies?
Because levy rates are based on the cost of claims, the fewer injury claims that are made, the less the levy rate should be for the following year(s). Your client can help reduce their levies by:
- keeping themselves and their workers safe
- learning from other employers in order to find ways to reduce injuries in the industry overall
- helping injured people return to work more quickly and, in turn, reduce costs.
Your client should also look at ACC’s incentive-based programmes, which have been introduced to help improve workplace health and safety. If an employer can meet the criteria, they may be entitled to a levy discount. To find out more about these programmes, see:
Last updated: 3 July 2012