Published on the 13/05/2014 | Written by Newsdesk
The special exemption granted to TechnologyOne by New Zealand’s Inland Revenue Department (IRD) shouldn’t be interpreted as a cloud free-for-all either for Australian or NZ taxpayers…
In April TechnologyOne announced that an exemption issued by the IRD would allow its New Zealand customers to store their financial records on its Australia-based cloud service which was launched in February.
While the decision loosens New Zealand’s traditional chokehold over financial records location, it does not signal a free-for-all with regard to data sovereignty issues. And while Australia’s rules regarding storage of financial data are somewhat more liberal with regard to their location, there are a series of standards which organisations and individuals need to remain mindful about.
According to a spokesperson for the IRD; “The Tax Administration Act 1994 and the Goods and Services Tax Act 1985 require taxpayers to keep records in New Zealand. Generally, taxpayers using a cloud computing service to store their business records will need to ensure that their records are being stored in data centres located in New Zealand.
“However, the Commissioner has the discretion to authorise the offshore storage of records. Applications can to be made by an individual taxpayer or a third party data storage provider, such as a cloud service provider, for approval to store records offshore for their clients.” This is what happened with Technology One.
Any application to store records offshore must be made in writing and each application will be considered on the merits of the case and may include a review of the compliance history of the applicant. If an authorisation is granted to a third party, the individual taxpayers for whom the third party holds records for would not need a separate authorisation from the Commissioner.
Under Australian legislation the Tax Administration Act 1953, Taxation Ruling TR 96/7 and Taxation Ruling TR 2005/9 relating to record keeping by taxpayers, do not prescribe where Australian taxpayers’ records should be kept as long as they are “readily accessible, easily convertible into writing and are maintained with appropriate integrity”.
Taxpayers are also obliged under the Australian regime to; “take steps to minimise the risks of: inadvertent destruction or corruption of electronic records; unauthorised tampering with electronic records; and the possibility that electronic records and operating systems will become obsolete, due to constant upgrading or changing of computer systems.”
