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  1. #1
    Join Date
    Oct 2014
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    Auckland
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    96

    Default ACC levies for companies that exist only to own property

    I was wondering if someone might be able to clarity this for me... I own a commercial rental that I bought around four years ago. It's owned not by me but a company that I'm the sole director of. The company does nothing other than own that building. The company has just just received an ACC levy bill for the first time. The company makes no profit as I take it out as director's drawings. I personally pay ACC for my self-employed work which is separate thing altogether. I'm wondering, in what scenario would the company be able to claim on this insurance policy that has been foisted upon it?

  2. #2
    Join Date
    Sep 2004
    Location
    Hastings
    Posts
    14,879

    Default

    If it existed "only to own property" there would be no funds you could draw on.

    Director's drawings possibly equals shareholder salary and I understand that levies are based on that figure. I'm not sure that the company could make an ACC claim, but the directors / shareholders should be eligible.
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  3. #3
    Join Date
    May 2007
    Location
    Hamilton
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    3,604

    Default

    Perry's answer above is pretty much spot on.

    1) directors drawings - there really isn't such a thing. Either
    - Director paye salary
    - or shareholder drawings/salary

    2) If you are taking shareholder drawings, and a shareholder salary to allocate you the profit, then this is wages so ACC!

    Ross
    More Profit from Property? TEACH ME MORE
    Ross Barnett - Coombe Smith Property Accountants
    Proud to give the best property advice for over 13 years.

  4. #4
    Join Date
    May 2007
    Location
    Hamilton
    Posts
    3,604

    Default

    It also sounds like you have a normal company. There is two big problems, and the link at the bottom of this blog gives some great information about the difficulty of getting capital gains out.

    https://www.cswaikato.co.nz/index.ph...n-auckland/232

    Ross
    More Profit from Property? TEACH ME MORE
    Ross Barnett - Coombe Smith Property Accountants
    Proud to give the best property advice for over 13 years.

  5. #5
    Join Date
    Oct 2014
    Location
    Auckland
    Posts
    96

    Default

    Quote Originally Posted by Perry View Post
    If it existed "only to own property" there would be no funds you could draw on.

    Director's drawings possibly equals shareholder salary and I understand that levies are based on that figure. I'm not sure that the company could make an ACC claim, but the directors / shareholders should be eligible.
    Sure, it generates an income and I guess that's all that matters from ACC's perspective. It's just that the director/shareholders (me) are covered as individual persons by ACC and I already pay a handsome levy for it. The company is never going to fall off a ladder or be the victim of medical misadventure. It just seems a bit cheeky. I wonder if investors who receive dividends from the sharemarket pay levies on those?

  6. #6
    Join Date
    Oct 2014
    Location
    Auckland
    Posts
    96

    Default

    Quote Originally Posted by Rosco View Post
    It also sounds like you have a normal company. There is two big problems, and the link at the bottom of this blog gives some great information about the difficulty of getting capital gains out.

    https://www.cswaikato.co.nz/index.ph...n-auckland/232

    Ross
    So it looks like my accountant should have set me up with a LTC instead... I might have a chat to him about that. Thanks all for your knowledge. I was going to interrogate ACC about all of this but I'm guessing that I can't do much about this particular bill.

  7. #7
    Join Date
    May 2007
    Location
    Hamilton
    Posts
    3,604

    Default

    For ACC
    - Employers pay ACC bill every year. So your company is an employer of you, so has to pay ACC
    - Employees pay ACC through PAYE, as your shareholder salary doesn't have ACC component, you get billed seperately for this.

    So you are paying the same ACC as everyone else.

    Sharemarket investors don't get a salary for their personal work done - you might also question why or how you justify a salary to you, depending on how much work you do personally.

    Ross
    More Profit from Property? TEACH ME MORE
    Ross Barnett - Coombe Smith Property Accountants
    Proud to give the best property advice for over 13 years.

  8. #8

    Default

    Don't use a regular company!
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  9. #9
    Join Date
    Oct 2014
    Location
    Auckland
    Posts
    96

    Default

    Quote Originally Posted by Nick G View Post
    Don't use a regular company!
    An LTC instead perhaps?

  10. #10
    Join Date
    Mar 2013
    Location
    Auckland
    Posts
    1,675

    Default

    Sometimes ACC gets incomplete information and goes on fishing expeditions. I got an 'invoice' a few years ago as they had got wind of my LTC. An explanation that I was a PAYE earner and that the company was an ownership vehicle for a residential rental and they went away.

    Your situation is a bit different, but I would at least clarify that you are/aren't an employee and make sure that the industry is correct because I wouldn't be surprised if this was also a case of casting the net out to see what they land. Just because they've sent it to you doesn't necessarily mean that you're liable for it.
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