ATO defends IT upgrade in the Senate

"We have not had a catastrophic failure" ATO Second Commissioner, David Butler says

An expansion in scope as a result of new superannuation laws has been the root cause of the current IT-related problems at the Australian Tax Office, a senate committee has heard.

Speaking at the hearing, ATO Second Commissioner, David Butler put forward the argument that the work on the ATO’s new $400 million IT system was both necessary – as the result of aging legacy systems – and subject to scope change during its six year history to date.

“When work began in 2004 weren’t able to anticipate what would happen every year -- the increase in time and scope as the result of law changes,” he said. “The law has changed. Superannuation changes added time and cost to the overall work.”

Butler said he was pleased with the work done to date, citing the successful roll out of the conversion to income tax system component which had involved the conversion of 32 million accounts from an older system.

“We are starting from the proposition that IT system is quite a significant achievement… the project has delivered systems that most tax offices can only aspire to,” Butler said. “The [new] system is more flexible and agile to incorporate new changes to legislation.”

Despite the outcry over the state of stockpiled tax returns, Butler claimed that already a range of benefits to community had been delivered because of the change program including improved efficiency and cost savings.

He cited the example of the ATO’s case management system which had been reduced from 180 separate case mange systems down to one.

Defending the ATO from accusations that the project had been a failure butler said the ATO had advised tax agents that there would be delays associated with processing tax returns as a result of the IT overhaul.

“The system close was advised to tax agents… some people heard that and some people didn’t or decide not to hear that,” he said. “You can’t justifiably say that the system isn’t working – it is working very well.

“If you got an expert opinion on the issues we have had they would say that are the sort you’d expect in a project this size. We have had expected delays while we have implemented the system.”

Bulter also acknowledged that with the IT component of the ATO’s change program spending close to half of the overall projects budget of $825, additional funds for any further changes to the IT side of the program as a result of the Henry Review or post-Budget requirements would need to be sought.

The ATO also acknowledged that the work it had done around the IT for the Fringe Benefits Tax was lacking, particularly around initial end-user testing.

Earlier this week the Federal Government called on the Inspector-General of Taxation to review the Australian Tax Office's (ATO) income tax IT system upgrade in the wake of public complaints over processing delays.

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