ACC levies on rental income?

Question from Ruth updated on 25th May 2013:

We are receiving invoices from ACC claiming that we are self employed and therefore ACC are charging us ACC levies. Is it normal for a landlord to have to pay ACC levies? We are both employees of organisations and are paying ACC that way as well. The ACC charges don't seem right and we want to know if there is some sort of legislation that requires landlords to pay ACC?

Our expert Mark Withers responded:

Generally rental income is considered to be passive investment income that does not attract ACC. However, the manner in which this income is distributed can alter the incidence of ACC. For example, if a rental company pays a salary to a shareholder employee the nature of the income changes and the salary attracts ACC levies. Equally, if a partnership pays property management fees to a working partner the management fee would probably be considered personal self employment income that would be subject to ACC. The look through company is unable to distribute salaries where it is used as an investment vehicle or derives its income from rentals so income flowed from a LTC engaged in these activities should also not attract ACC.

Mark Withers and his team at Withers Tsang & Co specialise in advising on property related transactions, valuation and restructure services and tax planning.

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