‘Liable earnings’ is the term we use to describe your client’s earnings that are liable for ACC levies. In the event of injury, we also use these liable earnings to calculate lost earnings compensation. Generally speaking, how we calculate liable earnings depends on whether your client is self-employed or employs staff.
Self-employed liable earnings
Liable earnings for your self-employed client must be the result of their personal exertion. This includes any physical task (eg management, manual labour, professional services, and administration).
At the end of every financial year, your client is required to file an IR3 tax return to Inland Revenue to declare their income. Inland Revenue will then provide us with the relevant earnings so that we can calculate your client’s invoice.
There are three types of earnings your client can declare to Inland Revenue and which, in turn, are liable for ACC levies. These are:
- Schedular payments
- Partnership income
- Self-employed income.
Non-PAYE shareholder-employees
At the end of every financial year, your client is required to file an IR3 tax return/IR4 company return to Inland Revenue to declare their income. Inland Revenue will then provide us with the relevant earnings so that we can calculate your client’s invoice.
Employers’ liable earnings
To calculate your employer client’s liable earnings, we get the total amount of their payroll from the PAYE schedules (IR348) filed with Inland Revenue and then subtract:
- Payments not assessable for personal injury cover (eg redundancy payments, pensions)
- Any amount paid to individual employees above the current maximum earnings limit for the 2011/12 levy year, which is currently set at $110,018.00
- Any amount paid to injured employees to cover their first week of wages (before we take over payments)
- Any amount paid under the ACC Employer Reimbursement Agreement.
Last updated: 1 April 2011