As we discussed earlier the IRD is very engaged on the Cloud Computing issue. Nice email from them just in ….
Date: 17 December 2010 4:05:18 PM NZDT
To: Software Developers Liaison Unit
Subject: Revenue Alert – Cloud Computing : What it means for software developers
Revenue Alert for Cloud Computing
17 December 2010
On 13th December Inland Revenue issued a Revenue Alert on “cloud computing” and the implications this has on tax records. The alert has generated some discussion from Software Developers and I want to clarify Inland Revenue’s position as it applies to you.
A Revenue Alert is intended to provide information about significant and/or emerging tax planning issues. This Alert was intended to proactively remind taxpayers and businesses of the crucial importance of record-keeping for the integrity of the tax system, and that when they consider cloud computing services as part of their IT infrastructure; they ensure they can still meet their obligations under the Tax Administration Act.
However, there is provision for the Commissioner to agree to taxpayers keeping their business records outside of New Zealand.
Inland Revenue will work with software developers to restate the principles which will be applied to allow taxpayers the ability to store records outside New Zealand. In this context it may be possible to exempt specific products from the usual requirements, where for instance Inland Revenue can be satisfied that any records stored in a cloud computing package can be retrieved should that be required.
Please note an Alert should not be interpreted as being Inland Revenue’s final position. Rather, an alert outlines the Commissioner’s current view on how the law should be applied in his role to protect the integrity of the Tax Act.
Inland Revenue may also review the current legislation surrounding the requirement for record-keeping including the location of electronically stored information, given the growing use of cloud computing and our own business transformation programme (to enable businesses to manage most taxes through their accounting or payroll software).
If you have any questions about this communication contact me via the Software Developers Liaison Unit email account, questions pertaining to the revenue alert itself should be sent to firstname.lastname@example.org
Team Manger, Software Developers Liaison Unit
And so the conversation continues!
And in the open now all good thanks guys – enjoy your Christmas party!
Can you provide an update on this. I understand that new Legislation was introduced last year on this point.
@Harvey – There has now been some legislative change but no practical changes as yet. The Tax Administration Act 1994 was amended on 2 November 2012 to enable the Commissioner to authorise “persons” (like Xero and other SaaS providers) to hold, on behalf of tax payers, records outside New Zealand.(see Section 22 (2BA)). The IRD are now working on what their requirements will be to provide this authorisation and have released a draft Standard Practice Statement ED0150 for public consultation – responses were due by 21 December 2012. We have provided feedback to the IRD on this document and will be applying for approval as soon as the Standard Practice Statement is released. In summary each individual taxpayer will not have to apply, Xero will be seeking approval on behalf of all of its NZ customers