IRD's business transformation project to come in under budget

The Inland Revenue's new tax service software has brought the forecast cost of the project to below $1 billion. 

The software installation will also come online before its due date.

It is the backbone for an overhaul of the IRD's ageing information technology infrastructure and a customer focused update to its processes. 

The IRD had initially scoped the project's cost at $1.3-1.9 billion and has revised that after it discovered it can use Colorado-based Fast Enterprises' out-of-the-box software, which is already running in other countries, Revenue Minister Todd McClay told 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 the 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," Mr McClay says.

"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% of the project core services.

In announcing the reduced cost of the project, Mr 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)