Accident Compensation (Interest on Instalments) Amendment Act

ACC mainly pays for the Accident Compensation Scheme (AC Scheme) from accounts funded by levies, which ACC collects from New Zealanders including businesses (employers, self-employed, contractors, and shareholder-employees).

Most businesses pay their ACC levy invoice annually in a single payment. However, ACC also offers a range of instalment plan options to pay, including a 3-, 6-, or 10-month instalment plan. Historically, ACC has required some businesses that use an instalment plan to pay debit interest on levies remaining outstanding. It continues to do so for those using a 10-month instalment plan currently.

ACC considered it was acting lawfully in charging the interest. Potential legal issues were identified when ACC proposed to consult on setting a method in regulations for calculating a debit interest charge to be included in instalment plan fees.

It is reasonable and prudent for ACC to charge debit interest when businesses pay their levies by instalments because ACC is forgoing any interest it would have earnt from investing the levies earlier. This is fairer for those businesses paying their levies in a single payment on the due date.

This amendment aims to clarify legislation on instalment plan interest and will apply to all instalment plans. ACC will be able to choose when to charge, or waive, debit interest. This validates ACC’s current and past practice, preventing any potential legal challenges on this point.

A temporary interest rate of 2.73% will apply for 10-month instalment plans, and a rate of 0% will apply to 3- and 6-month plans. Those rates are the same as the ones ACC charged before the change – so if you are paying via an instalment plan, nothing has changed for your levy payments at this stage.

These temporary rates will apply until such time as regulations setting out the interest rate and waiver circumstances are made. MBIE and ACC intend to consult on these, subject to Cabinet approval, later this year.