22nd May 2006 
 
The Institute of Chartered Accountants, NSW Farmers Association and the Law Society of New South Wales are calling for an urgent review of workers compensation legislation to ensure that small businesses, and in particular farmers, are not unfairly penalised.  
 
Some NSW business owners are being forced to pay excessive workers compensation insurance premiums because of flaws in the NSW workers compensation legislation according to a taskforce comprised of representatives of the three organisations.  
 
The Group’s Chairman, Scott Arnold said many principals do not claim workers compensation because of the impact it would have upon their premiums and said they were more likely to claim against their income protection insurance.  
 
However, under the NSW workers compensation legislation some principals of businesses in NSW are classified as ‘workers’ and must provide workers compensation insurance for themselves, whilst others are not and thereby are excluded from the workers compensation system.  
 
Workers compensation insurance is based on a recently revised definition of ‘wages’, which incorporates superannuation. Workers compensation insurance payments are impacted by the type of operating structure chosen to conduct their business. The impact on business owners varies between the alternative structures available. In many instances business principals are being assessed on profits and not on wages received by them.  
 
“An example of this impact is where many small business principals forfeit their own salary when they are going through tough times. In good times they compensate by drawing more money down and prudently may put more aside for superannuation,” Mr Arnold said.  
 
 
“In doing so, they are impacting the amount they pay on workers compensation insurance because workers compensation is calculated on wages, and superannuation is now included in that calculation.  
 
“We are calling for business principals to have a one-off ‘opt out’ clause. This would enable small business owners to avoid paying excessive workers compensation premiums based on their operating structure,” he said.