ACC Levy Review for Doctors: Are You Overpaying?

If you are a GP, specialist, dentist, or locum doctor in New Zealand, there is a reasonable chance you are paying more in ACC levies than you need to. In our experience working with medical professionals across Canterbury and New Zealand, overpayment is the norm — not the exception.

Here is how the system works, why doctors are particularly exposed, and what you can do about it.

ACC levies are charged to cover the cost of workplace injuries and income protection. As a self-employed person or business owner, you pay levies based on:

1. Your industry classification (ANZSIC code) — different industries carry different risk ratings
2. Your liable earnings — the income on which levies are calculated
3. Your cover type — standard cover vs CoverPlus Extra

The levy rate varies significantly by classification. A desk-based professional pays far less per dollar of income than someone in a high-risk trade. The problem is that ACC's default classifications are not always accurate — and if you are in the wrong category, you overpay every year.

Medical professionals face a specific set of issues that make levy overpayment common:

ACC classifies businesses by their primary activity. But many medical professionals operate through a company or trust structure, and the classification applied to that entity may not accurately reflect the actual work being done. A practice company classified under a higher-risk code than necessary will pay inflated levies.

Locum doctors, in particular, often have income from multiple sources — different DHBs, private clinics, and their own practice. Each income stream may be levied separately, and without careful management, you can end up with duplicate or excessive cover.

Standard ACC CoverPlus calculates your compensation based on your previous year's earnings — which can be problematic if your income fluctuates. CoverPlus Extra lets you agree a fixed compensation amount upfront, which can be structured to reduce your levy while maintaining appropriate cover.

Many doctors are on standard cover when CoverPlus Extra would be both cheaper and more appropriate for their situation.

If you operate through a company and pay yourself a shareholder salary, the way that salary is structured affects your ACC levies. Getting this wrong — either through poor structuring or a lack of review — can result in levies being calculated on a higher income base than necessary.

A proper ACC levy review looks at:

• Your current ANZSIC classification and whether it is accurate
• Your liable earnings and how they are being calculated
• Whether CoverPlus or CoverPlus Extra is more appropriate for your situation
• Your shareholder salary structure and its levy implications
• Any historical overpayments that may be recoverable

In many cases, a review identifies savings of $2,000 – $8,000 per year. For higher-earning specialists, the savings can be larger.

In some circumstances, yes. ACC allows applications for levy reassessment, and if you have been incorrectly classified, you may be able to recover overpaid levies from prior years. This is not guaranteed, but it is worth investigating as part of any review.

We recommend reviewing your ACC position at least every two years, or whenever:

• Your income changes significantly
• You change your business structure
• You take on locum work or change your employment arrangements
• You start or wind down a practice

ACC levies are not a set-and-forget item. Your situation changes, and your levy position should reflect that.

An ACC levy review is something your accountant should be doing as part of your ongoing relationship — not something you have to ask for separately. If you have never had one, or if it has been more than two years since your last review, it is worth raising with your accountant.

If you are a medical professional in Christchurch or Canterbury and want to know whether your current levy position is correct, we are happy to take a look.

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Eastmure & Associates specialises in accounting for medical professionals across New Zealand, including GPs, specialists, dentists, and locum doctors. We handle ACC levy reviews as part of our standard service for medical clients.