Tax Administration (Regular Collection of Bulk Data) Regulations 2022 (the Regulations) will require payment service providers (PSP) to report bulk transactions data from merchants to Inland Revenue on a 6-monthly basis.  The new rules will apply from 1 April 2023, with the first reporting deadline of 7 November 2023. 

The purpose of collecting datasets is to improve compliance and will enable Inland Revenue to verify business income of merchants.  Inland Revenue had previously been able to obtain this information via manual requests to providers, but the rules essentially automate the collection of this data which we expect will form a new dataset for Inland Revenue’s technology-based compliance analytics.

The new rules will apply to any businesses that facilitate payments between customers and merchants.  Such business include any entities that provide switch services, settlement services, online payment gateways and alternative payment methods.

The types of information about a merchant that a PSP will be required to report include identifying details (such as the merchant’s name, contact details and IRD number) and information about payments processed on behalf of the merchant, including the total value of debits, credits, cash-outs, reversals and refunds.

A PSP must provide the information electronically to Inland Revenue by:

  • 7 May for the preceding 6 month period starting on 1 October and ending on 31 March; and
  • 7 November for the preceding 6 month period starting on 1 April and ending on 30 September.

Failing to provide information will be an offence under the Tax Administration Act 1994 with criminal penalties ranging from fines to imprisonment.

If you are a payment service provider, you may be affected by the new rules which could create additional compliance considerations.  If you think you could be affected or are not sure if you are a payment service provider, get in touch with us to discuss.

For merchants, although the new rules will provide Inland Revenue with a considerable amount of data, this would need to be worked through at an individual taxpayer level to determine whether there are any identified tax issues that need to be addressed.  Inland Revenue would generally be expected to follow up any taxpayers it deems to be ‘at-risk’ with notification of a risk review or audit.  We can help you through this process and we would recommend that you get in touch as soon as possible if you receive any contact from Inland Revenue.

Above all, if you are concerned that your tax returns may not fully disclose your income, this should be rectified as soon as possible through a voluntary disclosure to Inland Revenue.  Get in touch with us if you would like our assistance to prepare a disclosure.