ATO reporting smooth sailing on IT system upgrade

The Australian Tax Office (ATO) has reported smooth sailing one week into the biggest upgrade of its IT systems in history.

Two weeks ago the ATO, after weeks of speculation, announced at the last minute of its 22 January, 2010 deadline that it would go ahead with changes to the National Taxpayer System, which has been used since the 1970s.

"We have moved the data from our current system into the new system ahead of schedule and all other aspects of the deployment are on track," an ATO spokesperson said. "This has been a significant undertaking where we converted approximately 27 million taxpayer records, 331 million accounts and 282 million forms.

"We plan to have the new system fully available for our staff to begin using from the week commencing 15 February."

The ATO would not provide any further information on the upgrade, which has been described as a "watershed" undertaking. In place of the old system will be a new income tax processing system, which extends the ATO's "integrated core processing (ICP) system to income tax and higher education loan accounts (HELA)".

The upgrade is part of the agency's broader Change Program, which aims to migrate it away from more than 180 legacy and paper-based systems to a single, integrated core IT system.

The program has, however, been hit by delays and budget blowouts, forcing the agency to publicly acknowledge it was under “extraordinary pressure”. There has also been significant online criticism of the role key ATO partner Accenture has played in the program.

The ATO's annual report, submitted in October last year, revealed the Change Program was high risk and mostly responsible for the office’s budget overspend last financial year.

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

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 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.

In October last year the ATO also accepted the recommendations from the Australian National Audit Office (ANAO) after the latter conducted a performance audit of the Change Program.

A senior industry analyst and former ATO employee, Kevin Noonan, told Computerworld recently the ATO had to "bite the bullet and proceed".

"The old income tax system, NTS, dates back to days when the computers they had didn't even do decimal arithmetic," Noonan said at the time. "They have been converted a number of times and, under maintenance, continue to be modernised, but the underlying structure and processes date back to those early days.

"There is a high probability that there are processes in those systems that are not well understood. The tax office is right in taking a very cautious approach because this is an enormous change for them. In order to set themselves up for change in the future it is just not practical to have a system that has unknown pieces in it and a legacy that goes back so far."

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