What is a CU CODE and why is it so important?
Did you know that around 1 in 5 self-employed Kiwis are using the wrong ACC CU codes and potentially paying much more than they need to in fees?
A Classification Unit (aka CU code) is a code that ACC uses to decide the levies your business has to pay to cover the expenses of any accidents you might have. Where it gets complicated is when you find out that there are over 500 different CU codes to choose from and your CU code is determined by the BIC codes that you or your accountant register with IRD (and there are over 5,000 BIC codes available). So it’s no surprise a hell of a lot of small businesses out there end up on the wrong codes and paying more than they need to.
The good news is that, if you find you were put onto the wrong code, then you can go back up to four years and claim refunds on any levies that have been over paid.
To understand what a CU code is and its importance, you’ll first need to understand what a BIC code is and how the two work together.
What is a BIC code and how does it affect my ACC CU code?
A BIC code is a Business Industry Classification code. BIC codes let IRD put businesses into categories, to make their work more manageable, efficient and fair as similar businesses are placed in the same categories. When you register with IRD for GST you have to choose one BIC code that best represents your business and the type of services or products you sell.
There are over different 5,000 different BIC codes available and when a code has been set up for you it is given to ACC who use it to decide which CU code you should have and the levies you need to pay.
How do CU codes work?
Every business or self-employed person has to have a CU code. Similar to the way that IRD deals with BIC codes, ACC gives companies a CU code so that they can be categorised with similar businesses. By categorising similar businesses together, levies and claims can be shared fairly across the businesses that are classed in the same group.
Each CU code represents group of businesses with a similar risk of workplace injury. Each code is then linked to a corresponding ACC levy rate, which is calculated based on the risks that group will face and the amount of money needed to cover the accidents that could happen.
If a self-employed person meets the criteria for several different codes they must use the CU code that represents the highest level of risk/has the highest levies. There may also be the odd occasion when a business can receive an exemption to use more than one CU code, but this will need to be negotiated with ACC on a case by case basis.
The BIC and CU code systems allows for the process to be streamlined but there is a lot of room for error. For example you or your accountant could pick the wrong BIC code or you could register the correct code initially but forget to update the code if your business moves in a different direction or if your role changes.
What should you do?
It’s important to regularly check the CU code listed for your business is correct, or you could end up paying a whole lot more than you need to! Let’s be honest, there aren’t any small businesses out there who have the spare cash just lying around to pay unnecessarily high fees. To get your code checked free of charge just hit the button below, fill in the easy form and we’ll do the rest.
A Classification Unit (aka CU code) is a code that ACC uses to decide the levies your business has to pay to cover the expenses of any accidents you might have. Where it gets complicated is when you find out that there are over 500 different CU codes to choose from and your CU code is determined by the BIC codes that you or your accountant register with IRD (and there are over 5,000 BIC codes available). So it’s no surprise a hell of a lot of small businesses out there end up on the wrong codes and paying more than they need to.
The good news is that, if you find you were put onto the wrong code, then you can go back up to four years and claim refunds on any levies that have been over paid.
To understand what a CU code is and its importance, you’ll first need to understand what a BIC code is and how the two work together.
What is a BIC code and how does it affect my ACC CU code?
A BIC code is a Business Industry Classification code. BIC codes let IRD put businesses into categories, to make their work more manageable, efficient and fair as similar businesses are placed in the same categories. When you register with IRD for GST you have to choose one BIC code that best represents your business and the type of services or products you sell.
There are over different 5,000 different BIC codes available and when a code has been set up for you it is given to ACC who use it to decide which CU code you should have and the levies you need to pay.
How do CU codes work?
Every business or self-employed person has to have a CU code. Similar to the way that IRD deals with BIC codes, ACC gives companies a CU code so that they can be categorised with similar businesses. By categorising similar businesses together, levies and claims can be shared fairly across the businesses that are classed in the same group.
Each CU code represents group of businesses with a similar risk of workplace injury. Each code is then linked to a corresponding ACC levy rate, which is calculated based on the risks that group will face and the amount of money needed to cover the accidents that could happen.
If a self-employed person meets the criteria for several different codes they must use the CU code that represents the highest level of risk/has the highest levies. There may also be the odd occasion when a business can receive an exemption to use more than one CU code, but this will need to be negotiated with ACC on a case by case basis.
The BIC and CU code systems allows for the process to be streamlined but there is a lot of room for error. For example you or your accountant could pick the wrong BIC code or you could register the correct code initially but forget to update the code if your business moves in a different direction or if your role changes.
What should you do?
It’s important to regularly check the CU code listed for your business is correct, or you could end up paying a whole lot more than you need to! Let’s be honest, there aren’t any small businesses out there who have the spare cash just lying around to pay unnecessarily high fees. To get your code checked free of charge just hit the button below, fill in the easy form and we’ll do the rest.