ATO: January income tax system changes biggest IT release ever

Australian Tax Office says its impending release of the new income tax system is the biggest it has ever done

The scheduled technical deployment in late January of the nation's new income tax IT system is the biggest release in the Australian Tax Office's (ATO) history, according to its second commissioner.

On the back of the release of the ATO' annual report, which revealed its change program is high risk and mostly responsible for the office’s budget overspend last financial year and a performance audit by the Australian National Audit Office (ANAO) last week, ATO second commissioner, David Butler, said the agency was now focused on the next stage.

"Right now we are working very hard on the income tax release, that is due to be deployed late January next year," he told Computerworld. "That is a huge, huge initiative and is by far the biggest IT release we have ever put in place in the Tax Office. We are moving to turn off the national tax payer system that has been used since the early '70s. So our focus is on that and we have started or continued with the design of that release and the components of it."

The ATO's change program is scheduled to finish late next year with the business activity statement system changes expected to be technically deployed in July with business deployment kicking off later in the year. However, with the Henry Report into the tax system due later this year, Butler acknowledged the ATO was keeping a close eye on potential impacts.

"'We need to be careful', is probably a good way of describing it with what we decide to do. The Henry Review will undoubtedly present challenges to us with what we need to do to deliver," he said. "So the business activity statements release is in design stages and the plan is still for technical deployment in July next year. But we will need to revisit that quite quickly once the Henry Review is out to see if it still makes sense."

The ATO's 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 ATO has accepted the ANAO's recommendations and Butler said it had already begun implementing changes.

The agency's annual 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.

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