We have already written a few articles about ACC and how it works. This time we feel it is the right time to help ACC and spread the word how they are helping Kiwis.
How ACC works?
New Zealand is one of the only countries in the world where everyone is insured against injuries in an accident. It does not matter if you are earning a salary or wage, retired or just travelling in New Zealand. If the accident happens, ACC will help to cover the costs.
You can look at the ACC as a complementary accident insurance. Unfortunately, if you are earning in New Zealand, then you have to make compulsory contributions to the ACC. If you are employed, then your employer will deduct it from your salary. If you are self-employed, you will receive the bill after the filing of the annual return.
Unfortunately, this cover does not replace medical insurance. If you get sick, it is still a good idea to consider separate medical insurance. The same time, you are safe from the accidents. What’s even better, It does not matter whose fault it was.
Is ACC a tax?
The short answer is no, it is a levy. But for you, the difference is almost unnoticeable. What really matters is that you will have to pay it and there isn’t really a choice. There is 2 noticeable difference.
- You will have to pay it to another government agency and the payment won’t show up in the MyIRD platform.
- A proportion of the ACC levy is tax deductible. (note: for Bosspac clients, the tax deduction happens automatically once you enter that you have paid it)
If the accident has happened and you can not work, the ACC will pay you. The general rule of thumb is that you will get 80% of your income as a weekly compensation. This rule applies easily if you are earning a salary.
For the self-employed, it is a bit more tricky. The ACC can look at the previous financial year to estimate the payout. The most important is the amount of liable income.