How ACC's Levy Increases and Independent Review affect Bookkeepers in New Zealand
The Accident Compensation Corporation (ACC) announced last week increases to earners’ and business levies alongside a government-initiated independent review of its performance. These changes aim to address rising costs and declining rehabilitation rates, but they will affect businesses and individuals alike.
For Bookkeepers in New Zealand, these developments present new challenges in managing financial obligations and compliance for clients. This blog breaks down the levy increases, key insights from the government’s announcement, and practical steps to navigate the changes.
Why are ACC Levies increasing?
ACC Minister Matt Doocey has highlighted concerns about the scheme’s declining performance and rising costs. Rehabilitation rates have been falling over the past decade, while weekly compensation and average claim costs have risen.
To address this, levies for earners and businesses will increase by up to 5% annually for the next three years. For someone earning the median full-time wage of $70,000, this will mean an extra $42 in the 2025/26 financial year and a total increase of $140 over three years.
Minister Doocey explained:
“This imposes significant costs on households… but the staging of the increase in ACC levies reflects that many Kiwis are doing it tough.”
These changes aim to make the scheme financially sustainable while reducing long-term dependency on ACC.
What does the Independent Review mean for ACC?
The government’s independent review will focus on claims management, evaluating whether ACC has the right systems and interventions to support quicker rehabilitation.
ACC Chief Executive Megan Main echoed the importance of improving outcomes, stating:
“Improving rehabilitation performance is a priority for ACC… We hope any findings will further help us improve our rehabilitation performance and assist us in ensuring the long-term sustainability of the ACC scheme.”
The review, alongside strengthened performance monitoring, seeks to reduce long-term dependency and improve social rehabilitation outcomes for claimants.
What does this mean for Bookkeepers?
As a Bookkeeper, you are central to helping businesses understand and manage these changes. Here is how the levy increases and review may impact you:
- Financial planning for clients
Higher levies will affect business budgets. Small and medium enterprises may feel the strain, requiring guidance on cash flow adjustments and financial planning. - Payroll updates
With earners’ levy changes effective from 1 April 2025, Bookkeepers must update payroll systems to reflect the new rates accurately. Staying compliant is critical to avoid penalties. - Advisory role
Clients may seek advice on how these levy increases influence their bottom line. You can provide valuable insights and strategies to manage the additional costs effectively. - Compliance with Motor Vehicle Levies
Businesses using motor vehicles will face additional costs starting 1 July 2025, requiring careful integration of these adjustments into budgets. - Navigating changes from the review
The independent review may result in further changes to ACC processes or levies. Staying informed will help you adapt quickly and keep your clients updated.
How can Bookkeepers prepare?
- Stay up to date
Regularly review updates from ACC and the government. Detailed information on levy changes is available on the ACC website. - Proactively communicate
Notify your clients of the upcoming changes and offer support in assessing how these increases affect their operations. - Optimise systems
Ensure your accounting software is updated to incorporate the new rates automatically. This will streamline payroll and invoicing adjustments. - Advocate for injury prevention
Encourage clients to implement workplace safety measures. Fewer injury claims can help reduce future ACC costs.
Looking ahead
The ACC levy increases and independent review signal a significant shift in how the organisation addresses its financial and performance challenges. While these changes present hurdles, they also underline the importance of your role as a Bookkeeper.
By staying informed, proactive, and adaptable, you can help your clients navigate these changes smoothly, ensuring compliance and effective financial management. As the ACC review unfolds, keeping a close watch on further updates will ensure you remain a trusted advisor in the ever-evolving business landscape.
Have Questions?
For detailed information on the new levy rates or to understand how these changes affect your business or clients, refer to the following sources:
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