'Wrinkles' with new IRD system adding up to a bigger headache, says top accounting body

Thursday, 6 June 2019

The country's top accounting body says its members are frustrated by problems thrown up by Inland Revenue's $1.6 billion Business Transformation project and many have not appreciated the department labelling a key part of the upgrade in April as a success.

But Chartered Accountants Australia and New Zealand (Caanz) tax boss John Cuthbertson said the department had been working with the accounting body on its members' concerns and believed the problems would be fixed.

Caanz had held back from commenting on the Business Transformation project over the past few weeks.

Cuthbertson's measured criticisms amount to the first comprehensive and independent assessment of how a key stage of Inland Revenue's upgrade in April went, and come after a number of its members came forward to the media with their own complaints.

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Cuthbertson said in a letter to members that it had received feedback from them on 'a large number of issues and concerns' regarding the new system that were time-consuming to deal with and were negatively impacting accountants and their relationships with clients.   

'Our concern is that as well as impacting tax agents' businesses directly, some of the issues have wider consequences for the overall system,' he said.

The key issues included the 'correctness' of debt letters sent to tax agents and their clients, incorrect penalty and interest calculations 'particularly where tax pooling is concerned' and 'incorrect notifications regarding unread correspondence and amounts of tax payable'.

The unexpected automatic refund of tax credits had been another bone of contention. 

Cuthbertson said the complaints amounted to 'a series of little issues that when combined end up being a bigger issue'.

'Our members have not been that appreciative of Inland Revenue being out there saying 'what a good system it is' and that there are no significant problems.

'That's right there have been no substantive problems, if you put it that way, but that is not the messaging our members like.'

Overall, the project would be successful, Cuthbertson said.

'Fundamentally the system is working and will do its job and will be good.

'It is just that there have been more teething problems than there needed to be.' 

In hindsight, Inland Revenue should have done more testing on the end-to-use usability of the system before it was 'let loose on our members', he said.  

Caanz was engaging closely with Inland Revenue and had identified 20 priority issues which Inland Revenue was aiming to get fixed quite quickly, he said.

'I talk to the deputy commissioner regularly about what is impacting tax agents and why, and the resourcing has been immediate in terms of bringing in extra resources to deal with those issues.' 

To date, too little information had been provided on Inland Revenue's website about the actions being taken, but Caanz had been told the department would provide a comprehensive update on Friday, he said.

The mood of accountants varied but overall there was 'still a degree of frustration', he said. 

'Some of our members are a lot more frustrated than others, but certainly they have all felt the effects of this and we have heard that loud and clear.

'Members are saying they don't think it is going as well as it has been glossed up to present', and they wanted Inland Revenue to publicly acknowledge that, he believed. 

National Party revenue spokesman Andrew Bayly said one 'serious issue' that has been raised with him was Inland Revenue going directly to taxpayers and 'routinely bypassing their tax agents such as their accountants'.

'Suddenly taxpayers who have never had any direct contact with Inland Revenue are getting texts and emails from them.

'Finding IRD emailing and texting them directly is causing unnecessary concern for many taxpayers.

'Then if the taxpayer follows the instructions to log in and complete their tax return on-line, they find an account already pre-loaded with information, in many cases this can be wrong because it might not include all of a person's income.

'If the taxpayer confirms the information is correct, they are opening themselves up to potential liability and fines,' he said.

Bayly said that and other issues amounted to more than 'wrinkles', as Inland Revenue had described them.

'People and companies are also unable to access information about student loan balances or imputation credits.

'Taxpayers who make voluntary provisional tax payments have been refunded those payments, and the ratio method of calculating provisional tax, which eliminates interest charges, is no longer available.

'This recent update has happened under Revenue Minister Stuart Nash's watch and he needs to reassure taxpayers they won't be penalised for Inland Revenue's failures,' he said.

Cuthbertson said Caanz members wanted the issues they had prioritised to be fixed as soon as possible, but there had been no talk of compensation.

Inland Revenue declined to comment.  

The department on Tuesday apologised for overloading at its call centres, which have been struggling to deal with a 'near record' number of calls from people with queries about their taxes and the department's new processes.