Is your business ready for a wage subsidy audit?

It may seem like a lifetime before our economy goes back to normal again, but New Zealand is turning around a lot faster than any other country. And while you may be preparing for your next steps as a business, the Ministry of Social Development (MSD) have initiated the extreme task of auditing some applications that were made under the Wage Subsidy Scheme, that you and your business may or may not have applied for.

As a business, you should be looking to revalidate your eligibility to have claimed both the original 12-week Wage Subsidy and/or the current 8-week Wage Subsidy extension. Your business must be prepared should you have to pay back any amounts claimed if there was no entitlement to the scheme. If you made a claim because of an anticipated revenue loss under the original scheme, it’s essential you validate and document that the loss did occur as predicted.

To check your eligibility when it comes to an audit by MSD, there are four key areas to consider:

1.     How confident are you that your business was and remains eligible for the Wage Subsidy?

Take a look at the sections of the declaration that were not certain at the time that you sent in your Wage Subsidy application, such as your revenue decrease and the amount you paid your employees.

2.     How confident are you that your business was and remains eligible in terms of all employees named on your application?

If you’re a large business, your payroll costs and employment numbers every payday may have changed, such as employees moving in and out of the business due to parental leave. Ensure that all your employees within your application were eligible for the Wage Subsidy during the entire 12 weeks of the original Scheme or eight weeks for the extension.

3.     Has your business documented evidence that supports your eligibility to receive and continue to receive the wage subsidy?

If you’re unsure, it could be helpful to start preparing these documents to ensure your eligibility. You should consider creating a Masterfile which contains all the criteria for eligibility in a checklist formation which includes all the evidence that goes along with each criterion.

4.     How confident are you that the evidence you have provided for an audit is sufficient enough?

As soon as you have your eligibility documentation ready, you should start to think about the quality of the evidence you have gathered. The requirements will vary depending on how large your business is, but if you run as a small business with few employees and your revenue is recognised under ordinary account concepts, your documentation may be straightforward.

If you would like to discuss your eligibility situation or whether you have prepared enough evidence for when an audit occurs, call us on 04 974 5056, and someone from our friendly team will be more than happy to have a chat.