IRD releases offshore data approach

Some great news today in respect to storage of data offshore. New Zealand’s Inland Revenue Department has released its Statement of Standard Practice on the “Retention of business records in electronic format, application to store records offshore and application to keep records in Maori” (SPS13/01). We’ll link to this document when it becomes available online.

Of course at Xero we are particularly interested in the offshore storage aspect of the document. This has been a topic of discussion for some time and was a classic case of the legislation lagging behind the technology.

For those newcomers, the Tax Administration Act 1994 (TAA) was amended on 2 November 2012 to enable the Commissioner to authorise “persons” (like Xero and other SaaS providers) to hold, on behalf of taxpayers, records outside New Zealand.(see Section 22 of the TAA). The IRD have now released the Statement of Standard Practice setting out their requirements to enable them to provide authorisation under the Act.

Inland Revenue have adopted a common sense approach and the Commissioner has some discretion to review applications on a case by case basis.

Xero will be submitting our application for approval on behalf of all of our New Zealand customers this week, so there is nothing you need to do.

We will keep you informed about our progress.

UPDATE 27 March: SPS 13/01 has been released online


Gayle Buchanan
March 12, 2013 at 2:03 pm

thanks for that Paul, appreciate it

March 13, 2013 at 10:00 am

I’ve always been curious as to why the application and data is hosted off-shore for NZ users. I appreciate bigger picture it’s cheaper with better network infrastructure but for NZ users running secure sessions it can be noticeably slower especially with the very low UFB uptake or availability. Have there been considerations of mirroring NZ data in NZ for performance similar to how Google operate?

Alastair Grigg in reply to Julian
March 13, 2013 at 4:02 pm

Hi Julian,
Having our primary hosting infrastructure located in the US is optimal for serving customers from all around the world. We utilize Akamai’s global content delivery network (CDN) to optimize page load performance for all users, but especially those outside of the US. The high levels of data read and write interactions in Xero make data mirroring across multiple hosting sites complex but we are developing the capability to have multiple live production data centers, which could include non-US locations if that was necessary.

March 13, 2013 at 6:24 pm

Where is the particular application located to complete for requesting approval to host offshore? Also, where can I obtain a copy of this statement of standard practice since it is not yet found online?

Paul Williams
March 14, 2013 at 11:12 am

@Rick – As at this morning(14 March) the IRD haven’t updated their website with the documents. We are monitoring the site and will provide a link in this Blog as soon as possible. However just to clarify – if you are a customer of Xero you don’t have to do anything with respect to your Xero data, we are applying for approval to hold this data offshore on behalf of all our NZ customers.

Rob Stewart
August 2, 2013 at 4:52 pm

Has Xero now been authorised to hold records outside New Zealand? Obviously it’s great that took this step but its a few months later and I can’t find anything to say it’s all fine and dandy.

Paul Williams
August 2, 2013 at 5:27 pm

@Rob – We applied for approval back in March and are still waiting on the IRD. It’s a new process and its taking them a while. I have been following up with them on a regular basis and I will update the Blog once the approval comes through .

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