Amidst PRISM Fears, NZ Government Approves Offshore Data Storage

Post the revelations by ex-NSA consultant Edward Snowden, people across the world have been ringing their hands concerned about the downstream impacts of fears about US storage of data. It’s nice to see a story that moves the pendulum in the other direction. Almost three years ago, New Zealand’s Inland Revenue Service dropped a bombshell on the cloud computing industry by suggesting that offshore storage of records by accounting software vendors may be a breach of the department’s requirement.

At the time Xero leadership posted stating that they were in discussions with the IRD to resolve the issues and rightly pointed out that it was a case of legislation not keeping up with technological innovations.

Well the wheels of Government turn slowly but proof today that they do turn (albeit at a glacial pace) with the news that the IRD has given a blanket dispensation to Xero to hold records offshore on behalf of New Zealand businesses. Back in March a guideline was released that provided some guidelines for the approval process for cloud vendors.

Xero and freight logistics company Cargowise are the first vendors to be approved but I strongly suspect that their competitors (Saasu, MYOB etc) will rapidly follow. As such it’s no competitive advantage for Xero against its competitors but rather a logical thing that is beneficial to the industry in general.

A long time coming, but good that the decision has been made.

4 Comments
  • Three years for government to make a decision is not surprising. Australian copyright law is out of sync with Cloud because law has not made the transition to cloud. The Optus case shows this. Its funny how when the cost constraints that Australian Government is up against has delivered potentially massive opportunities to those who can deliver with Cloud and provide cost advantage for that. This has suddenly brought cloud into the forefront of discussion here. I understand all NSW government IT contracts must now have a cloud option attached to the proposal. I think there is going to be very fast movement in this space in Australia.

  • Hi Ben,
    I am currently working on the question – What is the role of modern technology with respect to accounting? In some of your articles you refer to the Data is stored. Can you elaborate and assist in the points for answering my question

  • What does “ringing their hands” mean, Ben?
    Or did you mean “Wringing their hands”?
    I am still trying to picture hands ringing.
    Um… nothing.

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