Recently I became aware of a release note by the Inland Revenue Department that I found very interesting and pertinent to businesses using Cloud computing. It stated that Inland Revenue are aware that cloud computing is becoming a popular way for businesses to setup their IT infrastructure however they are concerned that business are not aware of or meeting their record keeping obligations, under the Inland Revenue Acts, when using cloud services.
Their current view, under Section 22 of the Tax Administration
Act 1994 (TAA), requires a person who carries on any business or
any other activity for the purpose of deriving assessable income in
New Zealand, to keep sufficient records, in New Zealand and in the
English Language, to enable the Commissioner to readily ascertain
information about their tax affairs.
The same requirements for GST records are contained in section 75
of the Goods and Services Tax Act 1985 and section 32 of the TAA
requires that all gift-exempt bodies must keep, in New Zealand,
sufficient records to enable the Commissioner to determine both the
sources of donations made to them and the applications of their
funds. It is the Commissioners view that only business records
stored in data centres physically located in New Zealand will
comply with the record keeping obligations in the Inland Revenue
Acts.
Although many end users will not necessarily know where the
datacentres, that house their information, are located, it is the
taxpayers responsibility to ensure they comply with the record
keeping obligations and therefore need to be satisfied that all
their business records will be stored in data centres located in
New Zealand.
The failure to keep the books and documents in New Zealand as
required by the Inland Revenue Acts is an absolute offence under
section 143 of the TAA and a person convicted of this offence is
liable to a fine.
So, if you are using any CRM system or third party accounting
application, ensure that your primary business records/data are
being stored in a New Zealand located datacentre. Don't risk being
fined or ending up in a legal situation due to country law
conflicts.
If you are concerned, talk to MHA about our New Zealand based
infrastructure and database solutions. We can customise a CRM
solution specifically to your business needs and automate your
business processes.