All self-employed kiwis need to pay ACC (Accident Compensation Corporation). ACC levies aren't as widely known as other taxes and can sometimes come as a surprise for new sole traders. But don't worry, this article will take you through what ACC is, how it works and how you can use Solo to simplify and master your ACC levy.

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Everyone who works in New Zealand pays ACC levies. These levies cover injuries that happen at work, at home, on the sports field, and when you’re out and about. Basically ACC (Accident Compensation Corporation) is New Zealand public health insurance.

Unlike employees, who have their ACC levies covered by their employer, as a sole trader, you are responsible for covering this levy yourself.

Yes, when you start out as a sole trader, you’re automatically on ACC’s CoverPlus. What you pay will be based on your BIC code and your income. There is an exception, if you earn rental property income you do not need to pay ACC on this income.

Your first levy invoice will arrive after the end of your first year in business. After that, you’ll be invoiced once a year, usually in July or August.

You only need to enter your BIC code in Solo's settings so that Solo can accurately calculate your ACC. Your Business Industry Classification (BIC) code identifies the type of work that you do and will look like this: M692430

You can find your BIC code by logging into your myIR account. Or check out our article on how to find your BIC code for step-by-step instructions.

When you enter your BIC code, Solo will automatically calculate your ACC as you go and display your ACC period on the Solo Dashboard and on the Taxes page.

In the Tax snapshot on the Solo Dashboard you will see how much ACC you owe and when the period ends.

When an ACC period becomes due (or overdue), wait until you receive an invoice from ACC in the post (usually in July or August). Compare the amount calculated by Solo with your invoice and pay the total due to ACC. Then go to the Taxes page to close the period by clicking the red 'Pay' button (a red 'Pay' button will appear instead of the 'Preview button shown below).

Note: If you don't want to enter your BIC code yet, you can leave the BIC code field blank and enter it later. This will just mean that ACC is not displayed on the Solo Dashboard or Taxes page until your code is entered.

Solo calculates ACC's standard cover type – CoverPlus.

You will receive an invoice from ACC in the post. Compare the ACC amount calculated by Solo with your invoice and pay the total due to ACC using the internet banking details provided on the invoice:

There are also additional ways to pay available on the ACC website.

Unlike GST and income tax, you can claim the money that you pay to ACC. To claim your ACC levy simply use the expense category 'ACC Levy'.

Solo calculates your ACC levy in the same way that the ACC levy estimate tool works – by using your BIC/CU code to identify the type of work you do and your liable income.

Liable income is the total of any self-employed income, zero-rated income or schedular payments. Minus your expenses (other than rental expenses). Rental income and expenses are not relevant for ACC.

Solo takes into consideration the maximum liable income level that you pay levies on. However, Solo assumes you work full-time and does not take into consideration the minimum liable income level.

If you work part-time (an average of 30 hours or less a week over a tax year) and your ACC bill is significantly higher than Solo's calculation, then it's likely that ACC doesn't know you're part-time. Simply inform ACC that you're part-time and they will send you a new invoice which ignores the minimum income amount and is therefore lower.