Simplifying record-keeping requirements for businesses

(Clauses 103(2) and (3), 104 and 110)

Summary of proposed amendments

The bill contains amendments to modernise the record-keeping requirements of businesses by making it easier for taxpayers to store records offshore through applications from their data storage providers, and by allowing taxpayers who submit returns electronically to store them electronically.

Application date

The amendments will apply from the date of enactment.

Key features

Generally, taxpayers are required to store their records in New Zealand. As taxpayers are increasingly managing their tax obligations through their payroll or accounting software, the use of offshore data storage for information, records and returns is growing. While the Commissioner of Inland Revenue can authorise taxpayers to store their records offshore, applications can only be made individually. A proposed amendment will change who can apply, so that Inland Revenue-approved data storage providers can apply on behalf of their clients. This will make it easier for taxpayers to store their data offshore, if they choose. The Commissioner will also be able to revoke an authorisation.

A further amendment proposes to allow taxpayers to submit and store tax returns electronically, thereby removing the current requirement to retain a hard copy.

Background

The proposed amendments have been developed to make it easier for taxpayers to conduct their tax compliance activities electronically, and to help Inland Revenue deliver the bulk of its services online.

Inland Revenue will provide administrative criteria for the authorisation, which will outline the standards required of data storage providers. The principle for these proposals and for the criteria is that there should be no greater obligation on data storage providers than currently exists for the storing of business records in any other format, so long as the Commissioner’s access to those records is not unnecessarily compromised.