GST record-keeping requirements

(Clause 94)

Summary of proposed amendment

An amendment is being made to align the record-keeping provisions in the Goods and Services Tax Act 1985 with proposed new amendments in the record-keeping provisions in the Tax Administration Act 1994 that:

• allow the Commissioner of Inland Revenue to authorise the storage of a taxpayer’s income tax records offshore through applications from their data storage provider; and
• allow the Commissioner to impose reasonable conditions for that authorisation.

Application date

The amendment will apply retrospectively to align with the proposed record-keeping provisions in the Tax Administration Act 1994, which will apply from the date of enactment of the Taxation (Annual Rates, Returns Filing, and Remedial Matters) Bill.

Key features

Generally taxpayers are required to store their records in New Zealand. As taxpayers are increasingly managing their tax obligations through payroll or accounting software, the use of offshore data storage for information, records and returns is growing. Proposed changes in the Taxation (Annual Rates, Returns Filing, and Remedial Matters) Bill will give the Commissioner of Inland Revenue the ability to authorise an Inland Revenue-approved data storage provider to store a taxpayer’s records offshore. These changes only apply to income tax and certain other records and not GST records.

The proposed amendment will also align the GST record-keeping provisions with the Tax Administration Act changes so that an Inland Revenue-approved data storage provider can keep a person’s (who is registered for GST) records offshore.

Background

The proposed amendments in the Tax Administration Act have been developed to make it easier for taxpayers to conduct their tax compliance activities electronically. Inland Revenue will provide administrative criteria for the authorisation, which will outline the standards required of the data storage providers.

In the absence of such an amendment for the Goods and Services Tax Act 1985, a registered person would have to apply on an individual basis to the Commissioner for approval to keep their GST records offshore, even though they would not need to do so for income tax and certain other purposes.

Updating the record-keeping rules in this way should also assist with administering the amended GST registration rules for non-residents (also discussed in this Commentary), which are likely to result in an increased number of non-resident businesses registering for GST.