Farmers may be paying too much ACC

The work of the Accident Compensation Corporation (ACC) is essential in maintaining social security in New Zealand, with the contributions of all employers and employees ensuring prevention, care and recovery from injuries.

However, many agribusinesses could be paying more than their share.

"In the period since 2012, we have reviewed the ACC payments of some 1090 clients and discovered that 52% of them have some sort of error requiring attention, including the wrong level of cover being selected. In addition, 30 per cent were found to be paying too much," Crowe Horwath advisor Ivanka Rosandich explains.

Rosandich points out that if ACC isn't regularly updated with accurate information, levies can easily be wrong.

There are numerous reasons for inaccurate levies, including classification errors, paying too much for the year ahead as payroll has reduced in size or changes in employment status (business owners classified as full time when they are part time, or classified as active when they are passive).

Rosandich explains that farming is the perfect example of a business with an ever-changing structure. "Often we find cases where the wife ceases farming activities and is only involved in the administrative side of the business. ACC allows partners or shareholders to be levied based on their individual roles. However, we often find many are instead being levied on the partnership or company rate."

Crowe Horwath managing principal Rick Cranswick, says "That money has been going to ACC when it could be going into business development or other things."

"If you look at the dairy industry at the moment, it could do with any extra money it can get, so this is a good place to go to see if you can get some money back,"

Optimising ACC relationships isn't just about getting the best cover for your situation; it is also about saving money. The 257 reviews conducted in 2015 by Crowe Horwath in the Hawke's Bay alone, resulted in a combined reduction of payments totalling nearly $150,000.

The company was initially surprised with the level of mistakes and overpayments made to ACC, but then realised there is a widespread lack of knowledge as to how the system works and is administered.

Cranswick says, "Crowe Horwath has taken a very active role in ensuring our clients have adequate levels of cover for their needs and are paying the correct levies. ACC has also been very supportive and forthcoming in providing advice and arranging repayments for any overpaid levies."

Rosandich says that with over 500 ACC classifications, engaging an expert is advisable.

"Ensuring you are being levied appropriately can be tricky. Business owners can find the levies confusing to decipher and often don't have the time to fully engage with their ACC contributions. Furthermore, depending on the business or policy type, levies may be made in advance, in arrears or a bit of both."

She says the findings demonstrate the necessity to routinely review ACC contributions and the cover selected for any given business.

"The circumstances of most organisations change over time and the classifications and associated levy rates change constantly too. A regular review will ensure not only that you are paying the appropriate amount and take advantage of any discounts available, but also that you have the best ACC cover for your business, your employees and yourself."