ACC ad­mits $100m in ‘er­rors’ to re­pay

The Press - - Business - Tom Pullar-Strecker tom.pullar-strecker@stuff.co.nz

ACC will re­fund $100 mil­lion plus in­ter­est to more than 300,000 busi­nesses, in­clud­ing the self­em­ployed, af­ter dis­cov­er­ing it had been overcharging some busi­nesses since 2002.

ACC has pro­vided a tool on its web­site that lets peo­ple check if they may be due a re­fund.

The two ‘‘dis­ap­point­ing’’ er­rors that led to the overcharging were dis­cov­ered ‘‘early last year’’, ACC busi­ness cus­tomer head Phil Ri­ley said.

But ACC had waited un­til now to ’fess up be­cause it needed to fix the un­der­ly­ing is­sues and put in place a sys­tem to pay re­funds, he said.

A to­tal of $36m plus in­ter­est will be paid to about 106,000 peo­ple who be­came self-em­ployed af­ter 2002 and who worked more than 30 hours a week.

They were in­cor­rectly charged ACC levies in their first year of busi­ness when reg­u­la­tions meant they shouldn’t have been, Ri­ley said.

An­other $64m plus in­ter­est would be re­funded to 200,000 busi­nesses that paid pro­vi­sional ACC in­voices and were wrongly not given au­to­matic re­funds af­ter their cir­cum­stances changed.

Ri­ley said the re­funds would aver­age $340 for the ‘‘first year self-em­ployed’’ and $415 for busi­ness own­ers that were wrongly charged pro­vi­sional levies, ex­clud­ing GST, plus in­ter­est at the 90-day bank bill rate.

Those av­er­ages re­flected the fact that some busi­ness own­ers had owned more than busi­ness that had been over­charged.

The big­gest re­fund of pro­vi­sional levies would be more than $154,000. That busi­ness was among three ‘‘out­liers’’ that would be due six-fig­ure re­funds, but a third of the pro­vi­sional-levy re­funds would be less than $100.

The largest re­fund for the newly self-em­ployed would be $4000. Re­funds would start this month and Ri­ley hoped all would be paid by April.

‘‘We very much re­gret the over­pay­ments and apol­o­gise to any­one who made a pay­ment that was not re­quired,’’ he said.

‘‘Our fo­cus is now on mak­ing this right as soon as we can, and we have al­ready be­gun con­tact­ing af­fected cus­tomers.’’

Ri­ley would not be drawn on how much in­ter­est ACC would have to pay, say­ing that had not been cal­cu­lated.

But the tim­ing and amounts in­volved ap­pear to sug­gest it will run into the tens of mil­lions.

The in­ter­est was ex­pected to be less than $100m, he said.

ACC dis­cov­ered the overcharging when im­ple­ment­ing changes as­so­ci­ated with its $669m trans­for­ma­tion project, which is still un­der way.

It told the Gov­ern­ment of the is­sues in De­cem­ber, but the pre­vi­ous gov­ern­ment had not been ad­vised, he said.

ACC had al­ready moved to plug the fi­nan­cial gap caused by the re­funds, fac­tor­ing it into new levy rates that it put out for con­sul­ta­tion late last month.

Its poli­cies re­quired it to spread its ef­fort to re­coup the lost rev­enue over 10 years, Ri­ley said.

In Au­gust, ACC sep­a­rately ad­mit­ted that it had over­charged hun­dreds of part-time self­em­ployed work­ers by clas­si­fy­ing them as full time.

Ri­ley said he ex­pected most peo­ple would be un­der­stand­ing about the lat­est er­rors.

‘‘I think peo­ple will be dis­ap­pointed. I don’t think it will un­der­mine the pur­pose of ACC – peo­ple get that,’’ he said.

‘‘I think they will trust us to do the right thing from here.’’

Ri­ley said the re­funds rep­re­sented less than 0.4 per cent of the money ACC had raised from em­ploy­ers and work­ers since the overcharging be­gan.

STUFF

ACC busi­ness cus­tomer-ser­vice head Phil Ri­ley says the overcharging is ‘‘very much re­gret­ted’’.

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