ACC for Shareholder-Employees in NZ (2026): PAYE, CoverPlus Extra and Common Mistakes

How ACC works for NZ shareholder-employees: PAYE vs non-PAYE, why CoverPlus Extra pays 100% of an agreed amount, the 2026 invoice changes, and the structuring mistakes to avoid.

If you own a company and pay yourself out of it, you are a shareholder-employee, and your ACC cover may be more complex than it looks. How you draw your money matters: PAYE salary, non-PAYE shareholder earnings, or a mix sets which ACC product you sit under, how much you pay, and how much ACC pays you if an injury stops you working. Get the structure wrong and you can be levied correctly for years, then find at claim time that your cover is a fraction of what you needed.

This guide on shareholder-employee ACC rules covers how ACC works for a shareholder-employee in 2026: the PAYE vs non-PAYE distinction, whether you can use CoverPlus Extra, the 2026 invoice and levy changes, and the two mistakes that most often catch owners out.

TL;DR: As a shareholder-employee, your PAYE income sits under standard ACC CoverPlus (up to 80% of last year's earnings), while non-PAYE earnings let you opt into CoverPlus Extra, which pays 100% of an agreed amount. ACC covers injury only, never illness, and from 1 April 2026 CPX clients get one combined annual invoice ¹⁹⁵.

How does ACC work if you're a shareholder-employee?

Every working New Zealander pays ACC, but a shareholder-employee can be paying it in two different ways at once. The way your income flows out of your company decides which.

When you pay yourself a PAYE salary, ACC treats that income exactly like an ordinary employee's. The ACC earners' levy is deducted through your pay, your business pays the work levy on that wage, and you sit under standard CoverPlus by default. If you draw non-PAYE shareholder earnings instead (typically squared up at year end through your tax return), ACC treats you like a self-employed person. You receive your own ACC invoice for that income, and you become eligible for CoverPlus Extra.

Many business owners run both at the same time, a modest PAYE salary plus a non-PAYE shareholder drawing, without realising the two halves of their income are covered under different ACC rules. That split is the key point to understand here.

The constant in all of it: ACC only covers injury caused by accident. It pays nothing if you cannot work because of cancer, a heart attack, a stroke, or a mental-health condition. For shareholder-employees, whose business often depends on them personally turning up, that illness exclusion is the gap that matters most, and we cover how to close it further down.

PAYE vs non-PAYE earnings: why the distinction changes your cover

The reason this distinction is not academic is the compensation formula. Standard CoverPlus and CoverPlus Extra calculate your weekly payment in fundamentally different ways.

Standard CoverPlus (your PAYE position by default) pays weekly compensation based on your actual liable earnings, up to 80% of your previous year's income, worked out by ACC at claim time ⁹. If you had a lean year, took dividends instead of salary, or only recently raised your pay, ACC works off the historical figure, not what you are earning now.

CoverPlus Extra (available on your non-PAYE earnings) pays 100% of an agreed cover amount you and ACC lock in upfront, minus tax, regardless of what your books actually show at claim time ¹⁹. For an owner with variable income, that certainty is the whole point: you know the exact weekly figure before anything goes wrong.

Here is the position by how you are paid:

Source: ACC CoverPlus Extra page ¹ and ACC's weekly-compensation rules for self-employed ⁹.

The mixed row is where owners get caught. If most of your income is PAYE salary and only a sliver is non-PAYE, the CPX you can take out only relates to that sliver. Your CoverPlus position on the salary still works off last year's PAYE figure.

Can shareholder-employees use CoverPlus Extra?

Yes, but only on your non-PAYE shareholder earnings. CPX is optional cover designed for self-employed people and non-PAYE shareholder-employees, and the appeal is certainty: it pays 100% of an agreed amount in weekly payments if injury stops you working, regardless of your actual earnings at claim time ¹.

For the year 1 April 2026 to 31 March 2027, you can set your agreed cover anywhere between $40,401 and $125,313 ². That is up from the 2025/26 range of $39,492 to $122,232 ³. If you are on the minimum, ACC automatically updates your policy to the new minimum from 1 April 2026, so you do not need to act to stay compliant on the floor ³.

Worked example: what CPX actually pays

Scenario: Priya owns a Riccarton design studio and draws most of her income as non-PAYE shareholder earnings. She sets her CPX agreed cover at $52,000 a year.

She breaks her wrist in a cycling accident and cannot work for three months.

ACC pays Priya $1,000 a week before tax, the full 100% of her agreed $52,000, until she returns to full-time work of 30 or more hours a week. She does not have to prove her income or argue about a bad trading year.

Before you settle on a number, it is worth running your own figures: ACC's free estimate-your-levy calculator shows what a given agreed-cover amount will cost you in levy, and our free ACC and cover health check sense-checks the cover level against your actual income.

What CPX costs

CPX is not always more expensive than going on standard CoverPlus, and a reduced-cover CPX can be markedly cheaper. Illustrative figures from MoneyHub ¹⁴:

MoneyHub NZ, 2025/26-era illustrative figures ¹⁴. The $39,492 figure is the prior-year (2025/26) CPX minimum, not the current floor; the 2026/27 minimum is $40,401 ². Verify any cost against a current MyACC for Business quote or ACC's levy estimator.

A reduced CPX can be a deliberate strategy: keep your ACC cover modest and cheap, then carry the rest of your income risk through private income protection that also covers illness. That is a structuring decision, not a guess, and it is exactly what a free review is for. Advisers who arrange CPX/income-protection structuring for self-employed clients typically charge a setup fee (for example, Tidal lists $500 + GST); at Smiths the initial review is free.

What the 2025/26 levy and invoice changes mean for you

Several moving parts changed across the 2025/26 and 2026/27 years. Here is what actually lands on your invoice.

The earners' levy went up. For the current 2026/27 year, the ACC earners' levy is $1.75 per $100 of liable earnings (1.75%), up from $1.67 in 2025/26 ⁶⁸. If you draw PAYE salary, this comes out of your pay automatically; on non-PAYE earnings it sits in your ACC invoice. The maximum liable earnings cap rose to $156,641 (was $152,790), giving a maximum annual earners' levy of $2,741.22 ⁷.

Worked example: the earners' levy on a PAYE salary

A shareholder-employee paying themselves $90,000 of PAYE salary pays roughly $1,575 a year in earners' levy (90,000 ÷ 100 × 1.75), deducted through PAYE across the year ⁶. Above the $156,641 cap, no further earners' levy applies, so a higher salary does not increase this particular line.

The Working Safer Levy got simpler. From 1 April 2025, the Working Safer Levy for CPX policyholders is calculated on your chosen CPX cover amount rather than your IRD earnings; for most people that reduces the levy and tidies up invoicing. The levy itself is a flat $0.08 per $100 of liable income ⁴.

One invoice from 1 April 2026. This is the change owners will actually notice. From 1 April 2026, CPX clients receive one combined annual invoice, all levies folded into a single CPX bill each year at policy start or renewal, including the previously separate Working Safer Levy ⁵. ACC is also removing the No Claims Discount and applying interest to instalment plans from 1 April 2026 ⁵, so paying annually rather than by instalment may now save you money where it previously did not.

The mistakes that cost owners at claim time

You can pay every ACC levy correctly for a decade and still be badly exposed. The damage almost always shows up at claim time, not levy time. Two mistakes do most of it.

Mistake 1: an outdated agreed value

CPX pays your agreed amount, full stop. If you set it years ago when the business was smaller and never reviewed it, that stale figure is what ACC pays, even if your income has doubled since.

A common error is locking in cover near the old minimum, growing the business, and never going back. If you set CPX at the 2025/26 minimum of $39,492 (the prior-year floor, now lifted to $40,401 for 2026/27) but you now genuinely draw $110,000, ACC will still only pay 100% of $39,492, roughly $759 a week, against an income that needs more than double that. The fix is a five-minute review at renewal: align your agreed cover with what you actually draw, within the $40,401–$125,313 band for 2026/27 ². Unlike standard CoverPlus, CPX will not quietly catch up to your real earnings. You have to set it.

Mistake 2: assuming ACC covers illness

This is the expensive one. ACC is an accident scheme. It pays nothing if you cannot work because of illness, cancer, cardiac events, stroke, or mental-health conditions, no matter how good your CPX cover is or how much levy you have paid ¹⁹. For a shareholder-employee whose company stops earning the moment you stop working, an illness that keeps you out for six months can wipe out a year of income while ACC sits on the sidelines.

For business owners, illness is a larger source of income loss than injury. CPX is a strong tool for the injury half of the risk; it does nothing for the other half. Closing that gap means income protection, which we cover next. For the full breakdown of what ACC does and does not touch, see our ACC gap explained guide.

Coordinating ACC with income protection and KiwiSaver

ACC, income protection, and KiwiSaver are not three separate jobs. They are one plan, and a shareholder-employee should set them up together.

ACC + income protection. The clean structure is to let ACC/CPX carry the injury risk and let income protection for the self-employed carry the illness risk, ideally on an "ACC offset" basis so you are not paying twice for accident cover. This is where a reduced CPX can make sense: keep ACC lean, and put the weight on a policy that pays for both illness and the income above what ACC covers. Because ACC pays nothing for illness, this is usually the most important cover a business owner holds.

This is also where being independent earns its keep. ACC-offset income protection is not a single product, it is a feature that the major NZ insurers price and define differently, so the right answer for a reduced-CPX owner is rarely the first quote. We hold no in-house product, so we compare ACC-offset income protection across every major insurer, Partners Life, AIA, Asteron Life, Fidelity Life, Chubb Life and Cigna among them, on wait periods, claim definitions and how each treats the ACC offset, rather than steering you to one. For a reduced-CPX-plus-private-IP structure, that comparison is the difference between a tidy plan and an expensive overlap.

ACC + KiwiSaver. Two things matter for owners here. First, the most common coordination point: the KiwiSaver government contribution. From 1 July 2025 it was halved to 25c per $1 contributed, to a maximum of $260.72 a year. You must put in at least $1,042.86 between 1 July and 30 June to get the full amount, and members with taxable income over $180,000 no longer receive it ¹⁰. Shareholder-employees who pay themselves mostly in non-PAYE earnings often contribute nothing automatically and miss this entirely. Because we are independent, when an owner needs to start or fix contributions we compare across the main providers, Booster, Milford, Generate, Simplicity, Fisher Funds and Kernel among them, on fees, fund type and risk profile rather than defaulting you to whatever scheme your bank assigned.

Owner-operators who draw their income as dividends and make no KiwiSaver contributions during the year can forfeit the full $260.72 without realising the rules have changed.

Second, if you pay yourself PAYE salary, the default minimum KiwiSaver contribution rose from 3% to 3.5% on 1 April 2026, scheduled to reach 4% from 1 April 2028 ¹¹. Employer contributions on that salary are taxed via ESCT, banded by your total pay (including the contribution): 10.5% up to $18,720, 17.5% from $18,721 to $64,200, 30% from $64,201 to $93,720, 33% from $93,721 to $216,000, and 39% above that, with thresholds aligned to the personal tax brackets from 1 April 2025 ¹³. And whatever you hold in KiwiSaver, make sure your PIR is right, 10.5%, 17.5%, or the 28% cap, because failing to notify your fund defaults you to 28% ¹². A KiwiSaver review checks all of this in one sitting, and ties into your wider retirement plan.

Shareholder-employee coordination at a glance

Your shareholder-employee ACC checklist (01–05)

01. Map how you're actually paid. Split your income into PAYE salary vs non-PAYE shareholder earnings. This decides your ACC product and where the levy comes from.

02. Check your CPX agreed amount against today's income. If it is stale, lift it within the 2026/27 band of $40,401–$125,313 ² at renewal.

03. Plug the illness gap. ACC covers injury only. Put income protection over the illness risk, ideally ACC-offset to avoid double cover ¹⁹.

04. Capture the KiwiSaver government contribution. Get at least $1,042.86 in between 1 July and 30 June for the full $260.72, especially if you draw non-PAYE earnings with no auto-contributions ¹⁰.

05. Plan for the 2026 invoice change. From 1 April 2026 you get one combined CPX invoice, the No Claims Discount is gone, and instalments now carry interest, so revisit whether to pay annually ⁵.

Reviewing ACC alongside the rest of your plan

Paying the ACC levy is not the same as being properly covered. Whether you are covered for the right amount, against the right risks, decides what happens to your income and your company if you are out of work for six months. Because we are independent and hold no in-house product, we can compare your income protection across every major NZ insurer and look at your ACC, income protection, and KiwiSaver as one structure rather than three disconnected bills. Owners with more complex setups can start at our business owners help page.

Frequently asked questions

Do shareholder-employees pay ACC twice if they have both PAYE and non-PAYE income? You pay ACC on each stream, but not twice on the same dollar. PAYE salary is levied through your pay and your business's work levy; non-PAYE shareholder earnings are levied separately on your own ACC invoice. The two cover different portions of your income.

Is CoverPlus Extra better than standard CoverPlus for a business owner? It depends on your income stability. CPX pays 100% of an agreed amount regardless of your books at claim time, which suits variable or lumpy income ¹⁹. Standard CoverPlus pays up to 80% of last year's earnings worked out at claim time ⁹, which can be fine for steady salaries but risky after a lean year.

Does ACC cover me if I can't work because of illness? No. ACC covers personal injury caused by accident only. It pays nothing for illness, including cancer, heart conditions, stroke, or mental-health conditions, no matter how much CPX cover you hold ¹⁹. That gap is closed with income protection.

What's changing with my ACC invoice in 2026? From 1 April 2026, CPX clients receive one combined annual invoice with all levies folded in, including the Working Safer Levy. ACC is also removing the No Claims Discount and charging interest on instalment plans ⁵.

How much is the ACC earners' levy for 2026/27? $1.75 per $100 of liable earnings (1.75%), up from $1.67, capped at $156,641 of liable income, a maximum of $2,741.22 a year ⁶⁷⁸.

I draw dividends, not salary, do I still get the KiwiSaver government contribution? Only if you actually contribute. You need at least $1,042.86 in between 1 July and 30 June for the full $260.72, and nothing happens automatically on non-PAYE income. Members with taxable income over $180,000 no longer receive it ¹⁰.

Book a free ACC and cover review with a Smiths adviser. Book a review

General information, not personalised financial advice. Seek advice tailored to your situation before acting. Craig Smith Business Services Ltd (FSP712931), trading as Smiths Financial, holds a Class 2 licence issued by the Financial Markets Authority and is a member of the Financial Dispute Resolution Service (FDRS). Written by Henry Smith, Financial Adviser; reviewed by Craig Smith, Principal Adviser. Last reviewed 16 June 2026.