1.1 On 19 April 2010, the former Assistant Treasurer directed the Inspector-General of Taxation (IGT) to review and report on the Australian Taxation Office's (ATO) Change Program1. An extract from the Minister's announcement of this direction is stated:

I want a comprehensive review of what has been occurring with the implementation of the Tax Office's IT upgrade, known as the Change Program. The Tax Office is completely independent so I personally cannot direct in relation to the issues that have been brought to my attention, that's why I have directed the Inspector General to step in and immediately review the program. The Terms of Reference are wide-reaching to ensure that all aspects of the program are investigated. In particular, I want a clear understanding on how taxpayers have been affected.

1.2 In response to the former Assistant Treasurer's direction and concerns raised directly by taxpayers, tax practitioners and their representative bodies, the IGT commenced this review pursuant to subsections 8(2) and 8(1) of the Inspector-General of Taxation Act 2003 (IGT Act 2003), respectively.

1.3 The IGT announced submission guidelines for this review on 5 May 2010, extracts of which are outlined below.2

1.4 The IGT submission guidelines advised that a staged approach would be undertaken, focusing initially on the impact on taxpayers and tax practitioners as a result of the latest release — that is, the part of the Change Program that relates to processing of income tax returns and refund payments (the income tax release). Once this report is released by the Minister, consideration can be given to whether there is a need to proceed with further reviews of the Change Program as identified in this report.

1.5 The IGT submission guidelines also observed that the ATO deployed the income tax release in January 2010 and that taxpayers, tax practitioners and their representatives have raised concerns about instances of extended delays and errors arising from the income tax release. These concerns included the ATO's inability to fix identified errors within reasonable times, the nature of the ATO's communication of the errors, the ATO's shifting advice on the timeframes to fix those errors and the ATO's lack of awareness of the impact that such errors and delays as well as associated communications were having on taxpayers and tax practitioners.

1.6 The IGT submission guidelines explained that the review will examine the basis for, and the ATO's management of, such concerns. This will provide a basis for conclusions to be drawn and, where necessary, recommendations of best practice to be made in order to minimise similar problems arising in the future.

1.7 In response, the IGT has received over 90 submissions from taxpayers, tax practitioners and their representatives, ATO staff and their representatives, and the Commonwealth Ombudsman. The IGT also met with members of the community and organisational bodies who made submissions, to further understand their experiences and concerns. These are listed in Appendix 3.

1.8 The IGT interviewed the ATO's independent assurers to the Change Program, Capgemini and Aquitaine Consulting, the ATO's independent contractor who reviewed the implementation of the income tax release, CPT Global, and the ATO's information and communication technology (ICT) contractor, Accenture. The IGT interviewed a number of current and former ATO staff and examined ATO systems to determine the underlying causes for community concern. The IGT also discussed these matters with a range of interested external stakeholders.

1.9 On 13 May 2010, the Senate agreed to a Notice of Motion requesting the IGT to produce a progress report on the review by no later than 15 September 2010, with a final report to be publicly released no later than 31 October 2010. Although the IGT is not compelled to comply with such a request, the IGT has endeavoured to complete this report as close to this date as possible given the framework and limited resources within which the IGT operates.

1.10 Since the Change Program is a complex, multifaceted development, it is very difficult to appreciate its nature without understanding its evolution. Accordingly, the report commences by providing a historical background in Chapter 2.

1.11 The report then focuses on the events both leading up to, and following, the deployment of the income tax release (the most substantial deliverable under the Change Program contract) in Chapter 3.

1.12 The IGT's observations, findings and recommendations that have been formed at this stage of the review are set out in Chapter 4.

1.13 This report is produced pursuant to section 10 of the IGT Act 2003. In accordance with section 25 of that Act, the Commissioner of Taxation was provided with an opportunity to give submissions on any implied or actual criticisms contained in this report. The Second Commissioner of Taxation has responded on his behalf and that response is reproduced in Appendix 15.


1 Sherry, N., Terms of Reference of Inspector-General of Taxation Review into Tax Office's Change Program, media release No. 065, 19 April 2010.

2 The IGT submission guidelines are reproduced in full in Appendix 2.