IRD's business transformation project seen coming in under $1 billion

Wednesday 11th November 2015

The Inland Revenue Department's new tax service software serving as the backbone to overhaul the tax department's ageing information technology infrastructure and update its processes to be more customer focused has brought the forecast cost of the project to below $1 billion and in a shorter timeframe.

The tax department had initially scoped the project's cost at between $1.3 billion and $1.9 billion, and has revised that down due to Colorado-based Fast Enterprises' out-of-the-box software, which is already running in other countries, Revenue Minister Todd McClay said in a speech to the Trans-Tasman Business Circle in Auckland. The IRD-dubbed business transformation project is also expected to be completed within seven years, down from an earlier prediction for 10 years.

Last month IRD flagged the project was running below budget and could provide greater benefits, having previously projected the final cost to be at the lower end of the range.

"In part, this is because of the selection of a core tax system that's built for tax and is already operating at other tax authorities and it will need less customisation," McClay said in speech notes. "It's also because of the commercial expertise that Inland Revenue has brought on board to help build the new system - people and companies who have done this work before, both in New Zealand and internationally."

The tax department's business transformation project to replace its 30-year-old FIRST IT system aims to protect the agency's ability to collect Crown revenue, while allowing it to deal with a raft of new responsibilities tacked on to the network over the past 15 years, such as overseeing KiwiSaver payments, student loans and welfare entitlements.

Fast Enterprises was selected as the preferred software supplier in July to deliver about 87 percent of the project core services.

In announcing the reduced cost of the project, McClay outlined plans to simplify the tax system with two discussion documents. One is seeking feedback on making it easier for companies to manage their Pay As You Earn (PAYE) and Goods and Services Tax (GST) obligations, with a view to reducing compliance costs and increase the digital interface.

The other paper is a wider view of tax legislation, covering the most efficient role for the IRD commissioner, whether maintaining taxpayer secrecy has an appropriate balance to efficiently provide public services, and what else should be considered to improve the tax system.

BusinessDesk.co.nz

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