A common complaint from trade business owners is having to pay ACC levies, especially for staff that never set foot on a building site or use any tools.
Here’s an example of how we help minimise ACC levies for our self-employed clients with staff who work in the construction industry.
Peter owns a construction company called ABC Construction Limited, he employs sixteen staff, including himself. Nine of his staff are qualified tradespeople or apprentices, the rest are site managers, engineers, or administrators, there’s also Peter, who’s the director.
Here’s the issue:
Under the default ACC levy arrangement, all staff members are grouped in together under the construction company, which means, Peter is having to pay construction industry ACC levies for all of his staff.
See figures below:
Total annual payroll of $1,000,000 X residential house construction levy rate = $22,415
Total levy: $22,415
Here’s the solution:
By separating out the trade staff from the managerial, consulting, and admin staff, and paying them from a new management and consulting company, the total staff ACC levy dropped $6,674 per year.
See figures below:
Trade staff annual payroll of $550,000 X residential house construction levy rate = $13,878
Non-trade staff annual payroll of $450,000 X management and consulting levy rate = $1,863.00
Total levy: $15,741
There are costs to consider, like registering a new company, additional annual financial statements, and a few hours of your accountant’s time. Generally, the ACC savings far outweigh the cost of setting up the new company. Any proposed changes need to be discussed in depth with your accountant to ensure there are no negative tax implications.
Please get in touch with us on 0800 346 765 if you’re looking for more information on reducing your company or shareholder ACC levies.
This article contains general information and does not take into account your individual requirements. Before making any changes to your insurance portfolio, please seek advice from a professional insurance adviser.