The IRD have recently put out a standard in relation to electronic signatures, how and when they can be used when providing information.

The IRD will accept an electronic signature on all documents that currently require a conventional signature, where this option is specified in the relevant document or guidelines.

An electronic signature for this purpose is deemed as one that complies with the definition in section 5 of the Electronic Transactions Act 2002 which defines an electronic signature as:

“in relation to information in electronic form, means a method used to identify a person and
to indicate that person’s approval of that information.”

Taxpayers are able to use electronic signatures when submitting documents online or via
software that complies with the requirements.

As common sense would provide, the standard provides that the signature must have the consent of the signatory.

Special conditions are imposed in relation to transactions using 3rd party software.

Some of these conditions relate to:

  • maintaining a log file that captures information that identifies the sender each time an electronic signature is provided
  • the log file being in its original format with no modifications
  • being able to provide Inland Revenue with the log, if requested, within a specified time limit
  • log files being considered and treated as 'business records' for the purposes of the Tax Administration Act 1994 and the Evidence Act 2006.

Third party software providers have additional impositions and have to ensure that “safeguards, including the manner in which personal information is collected, accessed, used, stored, processed, disposed of and disclosed, must comply with applicable New Zealand data protection and privacy laws, as well as the terms and conditions of their contractual obligations with Inland Revenue.”

With the current paperless revolution and more and more businesses joining the paperless bandwagon every day, the standard provides a list of considerations that need to be taken into account to maintain integrity of information provided. The increase in the use of accounting software such as Xero, and the self-assessing environment also means that this is a timely reminder from IRD as to what needs to be considered.