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 the IRD SDLU wants to clarify Inland Revenue’s position as it applies to software developers.
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 IRD SDLU via the Software Developers Liaison Unit email account, questions pertaining to the revenue alert itself should be sent to [email protected]