Working for business A guide to ACC for agents and advisors
Who to contact with a question The best person to talk to is your ACC Business Relationship Manager. We have dedicated teams who work with small and large businesses, as well as teams specifically focused on injury prevention and injury management. If you don t know who your ACC Business Relationship Manager is or if you have a specific question, contact us on: For tax agents and advisors Website Free phone 0800 222 991 Facsimile 0800 222 003 Email www.acc.co.nz/advice4agents BRMmail@acc.co.nz All information in this publication was correct at the time of printing in March 2011. This information is intended to serve only as a general guide. For any legal or financial purposes the Accident Compensation Act 2001 and regulations take precedence over the contents of this guide.
Contents Introduction 2 ACC products 5 ACC business categories 9 Discounts on levies 11 Levies, classification units and invoicing 14 Working with ACC on behalf of your clients 24 Client ACC claims 27 1
Introduction This booklet is for agents and advisors. It provides up-to-date information on ACC including product information, levies your clients pay, invoicing information, claims and what you need to do to act on behalf of your clients. How ACC works ACC is the Crown entity that manages New Zealand s, no-fault personal injury Scheme. The Scheme was set up in 1974, and provides injury cover for everyone in New Zealand. The injuries ACC covers range from sprains and strains to serious injuries but not illness or non-work related diseases, infections or gradual process injuries. In return for the comprehensive injury cover, by law you can t sue for injury in New Zealand (except for exemplary damages). How the Scheme is funded Each year ACC works out how much money will be needed to fund the Scheme. This means estimating how much it needs to cover the costs of next year s new injuries, any changes in existing claims, and to hold reserves. A claim may be as simple as covering the costs of a small sprain for a few months or for something more serious for many years. 2
Almost everyone in New Zealand contributes in some way to the ACC Scheme: employers/self-employed people levies are invoiced direct to your client by ACC salary/wage earners deductions are made from their pay, along with PAYE tax through motor vehicle registration fees and the retail price of petrol the Government through funding for non-earners. To be fully funded ACC needs to collect enough money during the levy year to pay for all costs over the life of every claim occurring in that year. Some seriously injured clients will incur costs for the next 30 to 40 years, so ACC needs to hold reserves to cover all these future payments. ACC moved to a fully funded basis in 1999. Previously, ACC levies were pay-as-you-go, meaning that levies only covered the claim costs that were to be paid out that year and no reserves were collected to fund the future costs of existing claims. As a result, today ACC still needs to collect levies to pay for the ongoing costs of claims for injuries that happened before 1999. The law requires these levies to be collected until 30 June 2019 and these appear on your client s work levy invoice under the residual portion component. The rationale is that by then the future costs of these claims will be fully funded. What does ACC cover? ACC provides 24/7, no fault personal injury cover for everyone in New Zealand. This includes a comprehensive range of cover for motor vehicle, non-work and workplace injuries. 3
The help available from ACC depends on your client s injury and personal circumstances but can include: Help with medical treatment We can contribute towards the cost of doctor s visits, physiotherapy, surgery, X-rays etc Help with income Through lost earnings cover, we can pay weekly payments if your client can t work because of injury Help returning to work We can help your client return to work as soon as possible after injury, with a tailored, work-based rehabilitation plan, physical aids, workplace modifications etc Help around the home We can arrange assistance for things like personal care, childcare and housework while your client recovers Help with travel We can assist towards travel costs to and from work and/or treatment Help for serious injuries Extra assistance is available for serious injuries, such as lump sum payments and help with home and car modifications Help following death Grants for your client s dependants can be paid if their injury results in death. 4
ACC products ACC WorkPlace Cover ACC WorkPlace Cover provides cover for employers, employees and non-paye shareholder-employees for work-related personal injuries. Under this cover a range of entitlements may be payable depending on the nature of an injury and the individual s needs. Employers pay at least 80% of their employees wages lost during the first week of a work injury, if they are off work because of it. After that, ACC pays up to 80% of their lost earnings. Employers are encouraged to get their employees back to work as soon and as safely as possible. If the employee is injured outside of work, they are still covered by ACC they pay for this through PAYE. ACC CoverPlus ACC CoverPlus is ACC s standard, personal injury cover for selfemployed people. It gives your clients access to a full range of medical and rehabilitation benefits, including lost earnings on up to 80% of their previous year s earnings. 5
ACC CoverPlus Extra ACC CoverPlus Extra is available to all self-employed and non-paye shareholder-employees who work 30 hours or more a week or whose earnings exceed the ACC CoverPlus Extra minimum which changes annually if they work less than this. ACC CoverPlus Extra is optional and if taken up, replaces ACC CoverPlus for self-employed people and ACC WorkPlace Cover for non-paye shareholder-employees, providing the same comprehensive, personal injury cover for both work-related and non-work-related injuries. It offers extra benefits like the ability to negotiate the level of lost earnings cover to suit your clients needs, reduction in lost earnings cover if your client already has other sources of income eg, income protection insurance, and is a good option for people whose income fluctuates or whose income is not a true reflection of their actual earnings, eg, they might split their income with a partner. It is also good for people whose business would continue generating income if they were injured and couldn t work and for those just starting out who don t have an income history. Clients who purchase ACC CoverPlus Extra will be invoiced separately for the residual portion of the earners and work account levies at a later stage. The table on the next page outlines the difference between ACC CoverPlus and ACC WorkPlace cover compared to ACC CoverPlus Extra. 6 To find out the current minimum and maximum thresholds, please go to: www.acc.co.nz/cpx
ACC CoverPlus and ACC WorkPlace cover ACC CoverPlus Extra Weekly entitlement pays up to 80% of the client s previous year s earnings (limits and conditions apply) is reduced if their business continues to generate income during their time off work or they return to work part-time the client must prove loss of earnings. pays 100% of the agreed amount receives 100% of the agreed value of weekly compensation, even if the client s business continues to generate income during their time off work or they return to work part-time they don t have to prove loss of earnings. Calculated using: Calculated using: the client s previous year s liable earnings the agreed amount of cover Levies for a self-employed client: levy rates specific to their individual role with the business the client s business and/ or occupational activity. for a shareholderemployee: the company s activities. Claims the level of lost earnings cover is determined after the client makes a claim based on previous proven earnings a seven-day stand-down period applies. the pre-agreed payment starts once the claim has been accepted a seven-day stand-down period applies. 7
ACC TimeOut ACC TimeOut provides cover for employees and self-employed people who are planning to take an unpaid break from work, eg, to study, raise a family, become a temporary caregiver or to travel overseas. If the person is injured during their break and unable to work, ACC TimeOut provides reassurance of a regular income during their break. Without ACC TimeOut, people who take unpaid breaks only qualify for ACC s standard help with medical treatment and rehabilitation. For more information on ACC products, go to: www.acc.co.nz/for-business 8
ACC business categories When your client is registered with ACC they are allocated to one of three categories which is denoted by a letter at the end of their ACC number. The three categories are: employer, non-paye shareholderemployee or self-employed and are described in more detail below: Employers (eg, A1234567E) An employer is someone who employs staff, including parttime, full-time and casual workers eg, someone who owns a restaurant and pays staff to wait tables or chefs to cook. Employers pay levies for their staff. These levies cover accidents that may happen in the workplace and a portion is for residual claims prior to 1999. Non-PAYE shareholder-employees (eg, A1234567D) A non-paye shareholder-employee is someone who owns or has owership rights in a limited liability company and is paid non-paye deducted shareholder salary or directors fees by the company. 9
Self-employed (eg, A1234567S) A self-employed person is someone who earns their income through their own business. Examples of a self-employed person include: a person operating their business as a sole trader or as a partnership a person who is self-employed and an employee, (also known as mixed earners) or self-employed and an employer a company director who is not a non-paye shareholderemployee of the company and who receives director fees. Self-employed people pay work levies to cover injuries that occur at work and earner levies to cover injuries that occur out of work. A person may also be self-employed if they are doing contract work or receiving schedular * payments (formerly withholding payments) rather than earnings with PAYE deducted. 10 * If a client s earnings include schedular payments ACC considers they are self-employed and they pay their own levies directly to ACC. Employers must deduct tax on schedular payments from contractors performing activities outlined in schedule 4 of the Income Tax Act 2007.
Discounts on levies ACC offers incentives to improve workplace health and safety. If your client can meet the criteria, they may be entitled to a discount on their levies. We have outlined these incentives below: ACC Workplace Safety Discounts The optional ACC Workplace Safety Discounts offer a 10% discount on Work Account levies for self-employed people and small-medium sized businesses in identified high-risk industries. If eligible, the discount applies for the current year and the following two years. Who can apply? Businesses can apply if they: are involved in one of the seven high-risk industries identified by ACC (a list of the high-risk industries is available online at www.acc.co.nz/wsd) and have 10 or fewer full-time equivalent workers, or an annual payroll of $499,000 or less. How to qualify A safety-oriented self-assessment must be completed and appropriate safety experience/knowledge demonstrated. This can be obtained by completing a short, industry-specific training course (usually half a day), funded by ACC.Other 11
evidence of health and safety training or on-the-job training may be provided. Copies of the self-assessment tool for high-risk industries are available for download at www.acc.co.nz/wsd. ACC Workplace Safety Management Practices The optional ACC Workplace Safety Management Practices programme offer three levels of discounts on the Work levy (ranging from 10% 20%) linked to a workplace health and safety audit by an independent, ACC-approved auditor, which ACC pays for. The discount levels are: Primary level 10% the business meets minimum performance standards Secondary level 15% there is consolidation of good practice across all aspects of workplace health and safety management Tertiary level 20% there is continuous improvement across all aspects of workplace health and safety management. A self-assessment form needs to be completed annually. A copy of the self-assessment form can be found at the back of the Audit Standards booklet which is available for download at www.acc.co.nz/wsmp The discounts apply for 24 months after which the business must reapply and be re-audited. 12
Who can apply? This is best suited to medium/larger businesses. However, anyone can apply, and some self-employed people are currently part of the programme. How to qualify To qualify, your client must pass a comprehensive assessment (carried out by an independent auditor) focusing on 10 key aspects of health and safety management best practice. Experience rating On 1 April 2011 ACC introduced experience rating, a mandatory pricing change which calculates a business s ACC work levy based on its claims history. Experience rating applies to all employers, self-employed and non-paye shareholder-employees who pay levies to cover work-related injuries, and who meet the eligibility criteria. Experience rating means the levy that your client pays for cover may in part be determined by their particular workplace performance, which is measured through their workplace injuries (the number of claims and severity) and return-to-work outcomes. If your client s claims experience is better than the average, they will receive a discount on their work levy, but if their claims experience is worse they will receive a loading. Experience rating recognises and rewards business owners (including self-employed people) with good claims experiences, and encourages a focus on improving workplace safety and making New Zealand businesses better places to work. For more information about ACC experience rating, go to www.acc.co.nz/er 13
Levies, classification units and invoicing Levies Levies are calculated based on your client s liable earnings as outlined below: Employers Employers invoices are calculated as shown below: Total gross payroll (taken from the PAYE schedule IR348) less: payroll not liable (eg, redundancy payments, pensions) total withholding payments (eg, schedular payments paid to contractors where there is no ACC levy deducted) payroll paid over the ACC maximum (any amount paid to individual employees above the current maximum earnings limit for the 2009/2010 levy year, which is currently set at $106,472) the amount paid to injured employees to cover their first week of wages (before ACC begins making payments) subsequent weekly compensation payments reimbursed by ACC (eg, where your client has paid weekly compensation directly to their employee on behalf of ACC). 14
Self-employed Self-employed clients are required to complete IR3 tax returns to Inland Revenue (IR) declaring their incomes. IR then provides ACC with the relevant information to calculate your client s levy invoices. There are three types of earnings liable for ACC levies. These are: A. Schedular payments filed under keypoint 12B B. Partnership income filed under keypoint 18B C. Self-employed income filed under keypoint 22. Your client s liable earnings may be reduced by: D. Expenses these can be deducted. The calculation for liable earnings for self-employed people looks like this: A + B + C - D = Liable earnings ACC levies for self-employed clients earnings are as a result of their personal exertions *. These include mental tasks (eg, management, accounts, administration) and physical tasks (eg, manual labour). Non-PAYE Shareholder-employees Non-PAYE shareholder-employees are required to complete IR3 tax returns/ir4 company returns to IR declaring their incomes. IR provides all non-paye shareholder-employee salaries from keypoint 41C of your client s company IR4 tax return to ACC for us to calculate their invoice as shown below: * There are specific keypoints on the IR3 for income that are not dependent on personal exertions. Refer to the Individual income tax return guide (IR3G) for details. If your client files their income under different keypoints on their IR3 return, those details are not forwarded to ACC. 15
Total gross remuneration (keypoint 41C) less: remuneration paid over the ACC maximum (any amount paid to individual employees above the current maximum earnings limit for the 2010/2011 levy year, which is currently set at $110,018) the amount paid to injured employees to cover their first week of wages (before ACC begins making payments) subsequent weekly compensation payments reimbursed by ACC (eg, where your client has paid weekly compensation directly to their employee on behalf of ACC). Classification units 16 What is a classification unit? IR asks all clients to select a Business Industry Code (BIC) when registering for GST or completing a tax return. ACC uses this BIC to determine your client s classification unit (CU) and the rate per $100 of liable earnings they pay in levies. The rates vary depending on the industry and are higher for higher-risk businesses. For example, a road freight company would have a different, higher-rated CU than a legal firm. What is the right CU for your client? Your client s CU must reflect their business activity, ie, the goods or services they provide, rather than the activities of individuals within the company. For example, a construction company with eight builders and two administration staff will be classified under House Construction as this is what generates the income for the company; administration is a result of the building work being completed.
Generally, businesses are classified under one CU. Your client may apply for multiple CUs under very strict criteria, ie, there must be two or more distinct activities, operating independently with separate accounting records. Although self-employed people may be undertaking more than one activity, they can have only one CU and the CU they use must be the highest-rated one. People in a partnership can choose the CU that best describes the activity they individually perform. For example, Glen and Rachel operate a construction business as a partnership. Glen works on house construction so would use the House Construction CU. Rachel does the bookwork so would use the Business Administration Services CU. Business industry descriptions for CUs are available online; go to www.businessdescription.co.nz To find out the most current classification unit rates go to www.acc.co.nz/levyrates Invoices Employers Employers will receive a provisional invoice each year covering the tax year (1 April - 31 March). This invoice is an estimate only and is calculated on the previous year s liable earnings, with the labour cost index applied. Information provided on this invoice includes: the liable earnings year to which the invoice refers liable earnings calculation your client s CU(s) 17
18 ACC Workplace Safety Discount (if applicable) ACC Workplace Safety Management Practices discount (if applicable) This invoice can be changed on request. Just call the Business Service Centre on 0800 222 991. When ACC receives actual payroll figures from IR, filed on Employer Monthly Schedules, we will issue a debit or credit note to cover the difference. Information provided on the debit or credit note includes: Work Account levy current portion (based on your client s CU) Work Account levy residual portion (based on your client s CU) Health and Safety levy (an amount per $100.00 of liable earnings). This levy is collected for the Department of Labour ACC Workplace Safety Discount (if applicable) ACC Workplace Safety Management Practices discount (if applicable) Employers invoices don t include the Earner levy as their employees have this automatically deducted via PAYE. Non-PAYE shareholder-employees The company whom the Non-PAYE shareholder-employee works for will receive a provisional invoice each year covering the tax year (1 April - 31 March). This invoice is an estimate only and is calculated on the previous year s liable earnings, with the labour cost index applied.
Information provided on this invoice includes: the liable earnings year to which the invoice refers liable earnings calculation your client s CU(s) This invoice can be changed on request. Just call the Business Service Centre on 0800 222 991. When ACC receives actual payroll figures from IR, filed on the IR4, we will issue a debit or credit note to cover the difference. Information provided on the debit or credit note includes: Work Account levy current portion (based on your client s CU) Work Account levy residual portion (based on your client s CU) Earners levy ** current portion for non-paye shareholder-employees who remain on ACC WorkPlace Cover and have not purchased ACC CoverPlus Extra ***. Earners levy ** residual portion for non-paye shareholder-employees who remain on ACC WorkPlace Cover and have not purchased ACC CoverPlus Extra. *** Health and Safety levy (an amount per $100.00 of liable earnings). This levy is collected for the Department of Labour. ** Earners levy This is included because payments made by the company have not had PAYE deducted previously *** Non-PAYE shareholder-employees who purchase ACC CoverPlus Extra take on the responsibility for paying their own invoices. 19
20 Self-employed ACC has both full-time and part-time invoicing parameters. It is important to confirm that your client is classified and invoiced correctly, because it may affect their entitlement to weekly compensation if they are injured and can t work. Invoices for your self-employed clients cover the tax year (1 April 31 March) and are calculated on the previous year s liable earnings because: any lost earnings compensation to self-employed clients is calculated on their previous year s tax returns rather than their actual incomes at the time of incapacity if your self-employed client has had no previous earnings their compensation would be calculated according to the minimum full-time earner rate, which changes annually (the 2010/2011 rate is set at $26,520) ACC issues invoices in advance. As a result, the previous year s earnings must be used as the current tax year has not yet been completed. Self-employed clients will only receive one invoice per year. The information provided on this includes: Work Account levy current portion (based on your client s CU) Earners levy current portion Previous year s residual portions based on the actual liable earnings for that year, split into: Work Account levy residual portion (based on your client s CU) Earners levy residual portion
Health and Safety levy (an amount per $100.00 of liable earnings). This levy is collected for the Department of Labour ACC Workplace Safety Discount (if applicable) ACC Workplace Safety Management Practices discount (if applicable) Ways to pay ACC levies Your client can pay their invoice in a number of ways, the most common being by: Internet banking, go to: www.acc.co.nz/paylevy Credit card, pay online (an online convenience fee of 2.49% applies). For more information about ways your clients can pay their invoice, go to: www.acc.co.nz/paylevy Changes to your client s employment situation If your clients have any concerns about meeting their invoicing requirements they should call the ACC Business Service Centre on 0800 222 776. What if your client is no longer self-employed? If your client s situation changes and they are no longer self employed, it is important to let us know the date this took effect and their total earnings from 1 April to that date. Once we have this information we can provide a debit or credit note which covers the difference between the invoice based on the previous year s earnings and earnings to date. You can estimate these figures if you don t have the exact details, 21
and we will provide a further debit or credit note if the final IR record is different. For example, Mr Jones has already received his invoice for the 2010/2011 cover period. This invoice was calculated on his 2009/2010 IR3 tax return. When you contact ACC to say Mr Jones stopped being selfemployed on 1 December 2010 (eg, inside the 2010/2011 tax year) ACC needs to know his earnings between 1 April 2010 and 1 December 2010. If you tell us he earned less than what was reported on his 2009/2010 IR3 tax return for that period, we will reassess his 2010/2011 invoice and issue a debit or credit note. Your client s invoices are payable even if they are disputing their account. What if your client is no longer an employer or non-paye shareholder-employee? If your client is no longer trading, it is important to let us know the date this took effect, including their earnings to that date. We will then provide a debit or credit note, which covers the difference between the provisional invoice, based on current earnings, and earnings to date. Again, you can estimate the final earnings and we will provide a further debit or credit note if the final IR record is different. 22
For example, Smith & Jones Ltd has received their 2009/2010 credit or debit note and a 2010/2011 provisional invoice. Smith & Jones Ltd stopped trading on 1 December 2010. We need the employee earnings figures for between 1 April 2010 and 1 December 2010 so we can issue a final 2010/2011 debit or credit note. The 2009/2010 debit or credit note would remain correct because that was based on figures given to us by IR. The 2010/2011 debit or credit note, based on the earnings from 1 April 2010 to 1 December 2010, would be reissued. For more information about levies, CUs and invoicing, go to: www.acc.co.nz/for-business To update your clients details online, see Accessing client information online on page 25 of this guide. 23
Working with ACC on behalf of your clients Authorisation process 24 Under the Privacy Act 1993, you require authorisation from your client before you can work with ACC on their behalf. We have outlined the various scenarios below: New Zealand Institute of Chartered Accountants (NZICA) members If you are an NZICA member, authorisation is already in place. When you contact ACC on your client s behalf, all you need to do is provide your: full name Institute membership number company name client s address company phone number. Taxation Institute of New Zealand (TINZ) members For TINZ members, you must first supply your details (company name, address, phone number) on company letterhead and request to be added to the authorised agents list. Other organisations For other organisations, your client will be asked to verify your request to act on their behalf.
They will need to complete form ACC1766 Giving Access to your ACC Levy Information before any information can be released. Go to www.acc.co.nz/acc1766 to complete this form online or to download a pdf. Accessing client information online In order to access your client s information online you will need to register on the ACC website. Go to www.acc.co.nz/online, click on Agents and Advisors, then click Register for ACC Online Services. There are different requirements for NZICA/TINZ members and other accountants/insurance advisors, which we have outlined below: NZICA and TINZ members You will need to complete the following forms: ACC5135 registration form ACC1766 Giving Access to your ACC Levy Information form (you must complete and sign 10 copies of these forms and submit them along with the registration form above). Once the 10 forms have been completed, you will have access to link any further clients without sending the ACC1766 form to ACC. However, we do advise you to retain a copy for auditing purposes. Other accountants/insurance advisors You will need to complete the following forms: ACC5135 registration form 25
ACC1766 Giving Access to your ACC Levy Information form (one ACC1766 must be completed for each client for whom you wish to have access). Evidence of identity will be checked before access is granted. If your own authority letters specifically mention ACC and ACC Online you can use these instead of completing the ACC1766 form. Once access is granted Once you have access you will be able to: search your client s account balances view your client s levy details request changes or apply for ACC CoverPlus Extra on behalf of your clients update your client s details including changing their contact information and amending their employment status (ie, full-time to part-time). Depending on access granted, you may also be able to: create and maintain other users within your firm create portfolios for your clients link and de-link clients to your portfolio/s update your firm s contact details. 26
Client ACC claims What to do if your client is injured at work Taking time off work incurs substantial costs to both employers and self-employed people, which is why it s best to get people back to work as quickly and safely as possible. ACC will help to get things back on track following personal injury. Self-employed If your client is injured at work, they should do the following: see a treatment provider who will complete an ACC claim form record the incident in their accident register (if the accident has caused serious harm your client must complete the Form of register or notification of circumstances of accident or serious harm which can be found on the Department of Labour website www.osh.govt.nz) if they need to take time off work, contact ACC to complete the appropriate forms and get a medical certificate from their doctor talk to ACC about how we can help them to stay at work and/or plan their return to work talk to ACC about how to prevent the injury. 27
Employers If one of your client s employees is injured at work and needs to make a claim, the employer needs to: report and record the incident (if the accident has caused serious harm your client must complete the Form of register or notification of circumstances of accident or serious harm which can be found on the Department of Labour website www.osh.govt.nz) ensure the employee sees a treatment provider to complete an ACC claim form on receipt of the claims notification letter, ensure all information is correct (ie, the employee s details are correct, date and time of injury, etc) pay compensation of no less than 80% of earnings for the employee s first week off work plan a safe return to work with the help of the employee s ACC case manager, which may involve easing the employee back to work or, maybe doing different work to start with regularly monitor and review the injured employee s situation at work talk to ACC about how to prevent the injury. 28
Getting in touch ACC Business Service Centre Employers 0800 222 776 Self-employed 0508 426 837 Email business@acc.co.nz Mail PO Box 795, Wellington 6140 (including CoverPlus Extra applications) Claims Free phone 0800 101 996 Email claims@acc.co.nz Mail PO Box 408, Dunedin 9054 Injury prevention assistance Free phone 0800 844 657 Postal payments Mail ACC Processing Centre PO Box 38023 Wellington Mail Centre Lower Hutt 5045
www.acc.co.nz 0800 222 991 Printed in New Zealand on paper sourced from well-managed sustainable forests using oil free, soy-based vegetable inks ACC5773 March 2011 ISBN: 978 0 478 36214 5