ACC will refund more than 300,000 business customers after preparations for a new levy system uncovered two historical overpayment issues, says Head of Business Customer Service Delivery Phil Riley.
The overpayments date from 2002, and total around $100 million – or 0.37 per cent of the levies collected from the Earners and Work accounts over that period.
“We will begin refunding customers this month,” says Phil Riley.
“We will refund all first-year levies collected since 2002 from self-employed customers, who worked fulltime (i.e. averaged over 30 hours per week across the financial year).
"This affects approximately 106,000 customers and equates to approximately $36 million in levies. We will also refund about $64 million to around 200,000 businesses who paid provisional invoices over the same period, in situations where they were not required to do so.
“We will also be paying interest.
“The average refund works out at about approximately $340 (excl GST) for first-year self-employed, and $415 (excl GST) for provisional payments.
“We very much regret the overpayments, and apologise to anyone who made a payment that was not required. Our focus is now on making this right as soon as we can, and we have already begun contacting affected customers.
“ACC has been true to the intent of the regulations that newly self-employed people – like all business owners – should pay a levy. However we discovered last year that since 2002 the regulations have been drafted in a way that does not provide for the levying of first-year self-employed to occur.
“We became aware of the drafting issues while preparing to replace our old levy system, which included a legal check that the new system would be compliant with regulations. When we found the problem, we immediately stopped invoicing all newly self-employed people.
“We have taken the opportunity to consider how we invoice all self-employed people, and are currently seeking feedback during levy consultation on a proposal that will switch to an arrears approach similar to how self-employed customers pay income tax.”
Phil Riley says preparations to migrate data to ACC’s new levy system uncovered the second issue of provisional invoices being paid by businesses that had subsequently ceased trading or changed their business structure but not informed ACC.
“Since these two issues were uncovered, we have been working on a number of actions to clear the way for refunds. This included verifying the extent of the problem; working with MBIE to assess if wider actions such as legislative change were required, and introducing our new levy system, which provides a permanent fix and allows automated reimbursements.
“We expect it may take until April next year to complete the refund process. We will work with Inland Revenue, the Companies Office, and searching public records to trace people if we hold no current contact details. In the meantime we strongly encourage customers to go to acc.co.nz to get more information, and to update their contact details.”
Phil Riley says the total refund has been factored in to the levies that ACC is currently consulting on. ACC’s funding policy requires it to spread impacts over 10 years, so the refund accounts for a one-cent increase in the Work Account (where a levy reduction is proposed), and well under one cent for Earners (where a 2.5 per cent increase is proposed