Published on the 19/09/2013 | Written by Newsdesk
Following updates from the IRD that allow tax data to be stored in offshore clouds, Xero is one of the first companies to be given approval…
New Zealand’s Inland Revenue Department has announced that Xero and CargoWise NZ will be allowed to store taxpayers’ electronic records outside New Zealand, thanks to updates to tax law which reflect the changes being wrought by technology, in particular cloud computing.
The announcement stems from an amendment to the Tax Administration Act 1994 (TAA) made in November 2012 that enables the Commissioner to authorise “persons” (like Xero and other SaaS providers) to hold records outside New Zealand on behalf of taxpayers. The subsequent approvals process was set out by the IRD in March this year, with the result that Xero and CargoWise NZ are the first two companies to be given approval.
A statement on the IRD website said CargoWise NZ Limited and Xero Limited have been “approved under section 22(8)(a) of the Tax Administration Act 1994 to store taxpayers’ electronic records outside of New Zealand”.
“Taxpayers who store their business records with these approved organisations do not need to obtain approval under section 22(2BA) to store their business records outside of New Zealand.”
There are, however, certain requirements that must be met, in order for The Commissioner’s approval for third party providers to store electronic records offshore:
- Information and records stored offshore remain accessible by the Commissioner and do not impede her compliance activities;
- Information and records will be available upon request in an electronic and usable format and at no cost to Inland Revenue; and
- In the event of a service agreement ending between a third party provider and its client, the third party provider will endeavour to return the data to its client in a meaningful and usable format that the client can use for subsequent reference and them to meet their record keeping obligations under the TAA.
It also reminded taxpayers that: “Although a third party provider may be used to store business records, taxpayers remain responsible for their tax obligations including retaining business records for the retention period (usually seven years) required under the Tax Administration Act 1994.”
Xero blogger, Paul Williams, this week wrote about the announcement, saying, “It’s great that the IRD has been able to work with the IT industry in this area and make the legislative changes required to keep pace with technology. It’s gratifying that we can finally remove any uncertainty around the storage of data offshore.”
He had previously written of his approval of IRD’s “common sense approach” to the changing needs of taxpayers in this classic case of legislation lagging behind technology.
