NZ Payroll - ACC Levy Maintenance

The Accident Compensation Corporation (ACC) in New Zealand administers levies that fund accident compensation schemes. There are two basic ACC levies as follows:

• earner levy - this is factored into the PAYE tax that is withheld from payees' earnings and funds non work-related personal injury compensation 

• employer levy - this is a premium paid by an employer based on the industry or industries in which they employ payees and funds work-related injury compensation.

The premiums payable as part of the employer levy are based on a percentage of certain wage items paid to employees. The percentage is determined by the industry classification code that applies to an employer. Multiple industry classification codes and premium rates may apply to a given employer depending on the industry and type of work employees carry out for the employer.

In the FastTrack360 system, the earner levy is automatically withheld as part of PAYE tax at the Tax stage of the pay batch process. The employer levy liability is calculated at the Wage Costs stage of the pay batch process.

The ACC employer levy liability for each payee in a pay batch is calculated during the Wage Costs stage of the pay batch process.
Before the system can calculate ACC liabilities as part of the pay batch process, the following must be configured:

• ACC codes and rates

• levy type and pay code group links

• ACC code and office links

• employer levy threshold.

Each of these is described below.

ACC Codes and Rates

ACC employer levy premiums differ depending on the industry in which payees work. For example, industries in which there is a greater risk of injury to a payee generally attract a higher premium to industries in which there is a lower risk of injury. 

Individual industries have a industry classification code that uniquely identifies the industry, which are referred to as ACC codes. Each ACC code has a different rate at which the ACC premium for that industry is calculated.
An ACC code is assigned to a job order prior to submitting the job order to timesheet. This allows the system to determine which industry the job order falls under and therefore the rate at which ACC employer levy liabilities are to be calculated for that job order.

The corresponding rate for an ACC code is subject to validity periods so if the rate for a given industry is due to change at the start of a new financial year, a new rate can be configured in advance for the new period. When a pay batch is processed, the system uses the rate that is valid on the pay period end date of the pay batch.

The ACC code and corresponding rates for each financial year are published on the Accident Compensation Corporation website (http://www.acc.co.nz).

Levy Type and Pay Code Group Links

Some payments to payees are not subject to the earner and/or employer levies. Therefore, pay code groups must be linked to each levy type to define which earnings are subject to the earner and employer levies respectively.

The relevant pay code groups must be created in Rates & Rules > Maintenance > Pay Code Groups before attempting to link the levy types to a pay code group. For more information, see Pay Code Group Maintenance.

ACC Code and Office Links

A payee's earnings that are subject to the ACC employer levy can be derived from a job order and/or the payee may have manual pay items or leave payments that are not directly attributable to any job order. To calculate the ACC employer liability for earnings derived from a job, the system references the ACC code that is assigned to a job order and therefore uses the applicable rate for that ACC code to calculate the employer levy liability. For earnings that are not derived from a job, the system uses the ACC code that is assigned to the agency office, which manages the candidate that is linked to the payee record, to determine the levy rate that is applicable to the earnings. Hence, agency offices can be linked to ACC codes so that a levy rate can be derived for calculating the employer levy on earnings that are not linked to a specific job order.

Employer Levy Threshold

A threshold applies to the ACC employer levy whereby there is a maximum levy amount that an employer is liable to pay in any given financial year. Any earnings that the employer pays to payees over the threshold amount are not subject to the employer levy. The employer levy threshold can vary between financial years and therefore it is necessary to configure the threshold amount before any pay batches can be processed.

The ACC employer levy is subject to validity periods so that you can configure a new threshold amount in advance if the threshold is due to change at the start of a new financial year. When a pay batch is processed, the system uses the threshold amount that is valid on the pay period end date of the pay batch.

A threshold also applies to the ACC earner levy and is automatically applied as part of the tax calculation process at the Tax stage of a pay batch. No configuration is required to set the earner levy threshold amount.

The ACC employer levy threshold for each financial year is published on the Accident Compensation Corporation website (http://www.acc.co.nz).