Revealed: IBM's false start on ATO's online E-tax overhaul

The ATO and IBM had been working on an online version of E-tax from as early as 2007, but it all fell to pieces.
Written by Josh Taylor, Contributor

Just over a week after the release of E-tax for Mac, new documents posted online have revealed a failed attempt by the Australian Taxation Office (ATO) and IBM to develop an online version of the software that would have been accessible on Windows, Mac, and Linux years before the Mac version ever saw the light of day.

The documents were posted on the Linux-themed blog of Andrew Donnellan, who said he had obtained the documents in 2011 under Freedom of Information (FOI).

The assortment of contracts, reports, emails, and minutes show that in early 2006, the ATO went to tender to redevelop its electronic tax lodgement application, E-tax, and technology giant IBM won the contract at the end of that year.

IBM was to use its Workplace Forms product to provide a downloadable E-tax application and an online web service for E-tax by tax time in 2008.

IBM encountered a number of issues with the development of the application, including ensuring that the downloadable software would work on Linux and Mac. In an executive report on the outstanding issues released in August 2007, the ATO was also concerned that the Workplace Forms system would not be able to handle 20,000 users accessing the online E-tax application at the same time.

IBM also highlighted that there were concerns over whether the files would have been adequately encrypted, whether the file size would be too large for users to download, whether Workplace Forms would have been capable of handling the size of the E-tax program, whether Workplace Forms could import or export data, and whether the company would have to bring out a number of extensions to Workplace Forms just to accommodate the issues surrounding E-tax.

The report ultimately said that the ATO would not be able to meet the desired outcomes for the overhaul of the E-tax software by tax time in 2008.

In September 2007, the ATO and IBM suspended work on the application. The documents released under Freedom of Information also included a draft deed of release and winding up prepared by law firm Clayton Utz for the ending of the contract between IBM and the ATO.

The initial contract was worth AU$769,999.59 to IBM. The documents have been censored to remove the amount proposed for the ATO to pay IBM for the work it had done up until the end of the contract. ZDNet has asked the Australian Taxation Office for additional detail on how much IBM was ultimately paid for this failed contract.

After the termination of the IBM contract, the ATO looked to push out an online version of E-tax even farther. According to minutes from a 2008 workshop meeting with consulting firm Capgemini, the ATO's deputy commissioner Erin Holland and Change Program first assistant commissioner Greg Dark at the time said that there were significant IT budgetary constraints as a result of the massive AU$814 million IT overhaul known as the Change Program that commenced in 2003 and was completed in 2010.

At the time, Dark and Holland recommended that the online version of E-tax "will need to be pushed out to at least 2010 and possibly beyond that". No decision was made during the meeting; however, the ATO has still yet to release an online version of E-tax.

ZDNet revealed last month that of the total AU$45 million that the ATO has spent on E-tax since 2006, AU$1.8 million was spent on looking at developing E-tax for platforms other than Windows and Mac, including Linux, mobile, and online versions.

The long-awaited launch of E-tax for Mac this month suffered its own hiccup, with the ATO releasing the software without having the developer certificate signed, preventing users running Max OS X 10.8 and above from using the application.

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