As property managers our job is to do the work required to ensure a good return on our clients’ investments. In ACC/IRD terms, that means you leave the ‘personal exertions’ involved in managing your properties to us, and among the many benefits of that approach is that you’ll likely be not liable for ACC levies.
If you’ve been paying ACC levies as an individual taxpayer, you should talk to your accountant as the March 31 tax year close approaches and they’ll explain your position regarding the levies. Essentially, because Quinovic manages a property as a third party, and you have no involvement with its management and operation, your rental income would be passive and therefore not liable for ACC levies.
Advice from NZCA to its chartered accountancy member firms says that the key point in determining whether an individual taxpayer is liable for ACC levies is the requirement that the income be derived from ‘personal exertion’.
"So if a self-employed person declares income from a rental property that is fully managed by a property management company, and the only involvement the self-employed person has with the property is to appoint the property manager, all other activities in relation to the property are carried out by the property manager. The income from the property would continue even if the self-employed person were incapacitated."
Such ‘investment’ income requires no effort, or personal exertion, by the investor to earn the income.
However, if there is no property manager, ACC considers that rental income liable for levies.
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