Australian Tax Office change program "risky"

The Australian Taxation Office (ATO) annual report has revealed its change program is high risk and mostly responsible for the office’s budget overspend last financial year.

The change program aims to migrate the agency away from legacy and paper-based systems to a single, integrated core IT system.

It commenced in December 2004 at an estimated cost of $350-450 million and was set to be completed by the end of 2007. However, the budget has blown out to double the original figure, hitting close to $750 million.

The report stated that the change program is currently undergoing Release 3, the “most difficult” phase, and that meeting the revised schedule will continue to be high risk.

"The success of our delivery deployment of the income tax system will depend on meeting milestones for completing product test and data conversion, and the results of the proposed business pilot,” the report states. “Failure to achieve these milestones for schedule and quality, is likely to result in deferment of the income tax release to a later date.

"It is clear that even with the many changes made to design, testing and program management processes associated with our change program, meeting the revised change program schedule will continue to be high risk for us. Moreover, until completion of the program, any new policy that requires major system support would require a replan of the program schedule. As a contingency we continue to maintain and update our legacy systems, but this adds extra costs to our operations."

Last financial year, the tax agency again failed to operate within its overall target budget. However, expenditure was 0.8 per cent, which was an improvement on the 4.4 per cent overspend of 2007-08 . The target was to be within 0.3 per cent.

In September, the ATO's Change Program Steering Committee approved plans for the agency to commence processing income tax returns on the new system from 1 February, 2010. The old system, the National Taxpayer System (NTS), will no longer be used, ending over 30 years of usage. The latest date for completion for the project is July 2010 with business activity statements (BAS) excise and other remaining tax products to be "deployed onto the integrated core processing platform". A new portal for businesses, tax agents and BAS service providers will also be launched at this time. A performance audit on the change program by the Australian National Audit Office (ANAO) was released this week.

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