03 May 10 Message from the Commissioner of TaxationThe introduction of our new income tax processing system has inevitably impacted both taxpayers and tax agents. I apologise if you waited longer than usual for your notice of assessment and/or refund.
I would like to especially thank tax agents for their patience and support while we completed this essential work. Without knowing each individual circumstance, I am not aware of situations where agents have been holding things up. Rather, they have been working with us to ensure the impacts on their clients have been minimised.
If you are due a refund and we have taken longer than 30 days since your return was lodged to issue a notice of assessment, you are entitled to interest.
The introduction of our new system was a one-off event, replacing a system more than 30 years old, and vital to the future of the administration of the community's tax system. Unfortunately, there is no time of year we could do this without impacting taxpayers and agents.
It was a huge task and the single biggest upgrade we have ever done. When we switched from the old system to the new we converted 27 million taxpayer records, 32 million accounts and 282 million forms. To do this, we had to stop processing tax returns in early 2010.
We chose early in the new calendar year as we thought it would have the least possible impact. We usually only receive around five per cent of returns during this period, as most people who don't use an agent must lodge their tax return by 31 October.
Given that income tax returns during this time would be lodged by tax agents, we started communicating with them in the months leading up to the new year about our plans to change over to the new system, providing an opportunity to lodge some refund claims early.
We explained we would need to stop processing tax returns from just before Christmas through to the end of January. We also explained we expected delays through February as we worked through stockpiled returns. Unfortunately we did run into two unanticipated issues with the new system that caused delays outside what we had originally planned.
One delayed matters for two weeks (which also had an impact on returns still coming in to us), and the other resulted in 140,000 refund cheques not printing. However, these cheques were sent last week.
These sorts of things are not unusual when implementing a system of this size, however it added to the time in which we could not process returns. It meant a longer-lasting impact on taxpayers and tax agents than we had originally expected.
Despite the delays, our new system has processed more than two million tax returns, including one million refunds. Since early April we have processed all newly lodged returns as per our service standards (94 per cent of electronic returns in 14 days and 80 per cent of paper returns within 42 days). We took a cautious approach during our ramp up of the processing of returns to ensure the accuracy of the calculations in assessments.
We do not have a stockpile of returns waiting to be processed. However, as is normally the case, there will always be some returns in our system because:
- we need to scrutinise high risk refunds that could indicate fraud
- there is a tax debt owing or an obligation due to the Child Support Agency and/or Centrelink
- there is information missing or incorrect in the return that we need to follow-up,with the taxpayer or agent, and/or
- people have lodged several years' worth of outstanding returns with their 2008-09 return.
I look forward to providing you with improved service into the future.
Commissioner of Taxation