IRD prepares for biggest shutdown ever
There will be some glitches — there will be something that happens that we didn’t foresee.
The head of the tax department expects “some glitches” as it completes its biggest switchover in 30 years to a new technology system but in the main it will go “smoothly”.
The Inland Revenue is shutting down its services from this Thursday at 3pm until 8am Friday April 26th in the third stage of its $1.6 billion transformation of the tax system.
The latest iteration will include all personal tax as well as family support payments like Working For Families and follows an update on GST and business tax undertaken in the previous two years.
IRD Commissioner Naomi Ferguson says the change will see 19 million tax records migrated in a process which has around 670 tasks that must be done in a specific order.
But after two previous shutdowns
she has confidence in the process.
“It is the third one so we do know — and that was part of taking this in small stages, taking over part of the system, making sure we knew how to do this,” she says.
“We have also done something like over 90,000 tests for this release alone. We have run three full mock go-lives which is like a practice run and everything went really smoothly in those.
“There will be some glitches — there will be something that happens that we didn’t foresee.
“We still have a handful of issues we are smoothing out but out of 90,000 tests that is nothing.”
This change is a big one for the general public as it will mean salary and wage earners no longer have to put in a tax return as refunds and bills will be automatic. From mid to late May, all salary and wage earners will hear from the tax department with around 1.6 million people expected to be due a tax refund of which around 440,000 people will be getting a refund for the first time.
The refunds will come direct into bank accounts and people are being urged to check their account details are correct in their myIR account before the end of May.
On the flip side, 240,000 will be told they have tax to pay (unless it’s under $50). Of those, about 86,000 will have had no recent contact with Inland Revenue over their tax.
Those with a tax bill will have until February 7, 2020 to pay it but after the switchover to the new technology, people will be able to set up automatic payments online to pay it off in instalments ahead of the deadline.
The new system will also allow people to upload receipts for donations, such as school fees, church donations and charity donations, to their online MyIR account as they come in rather than waiting until the end of the tax year to send the information by email or post.
Ferguson says the old system was no longer working as it was based on a paper-based world.
“We had added lots of bits on over the years but it was getting pretty creaky at the seams.”
While redesigning the technology Ferguson said it also wanted to take into account changes in society.
“People’s lives are very different these days. Thirty years ago people left school, went into one employer, stayed with that employer, and had a fulltime job.
“Both the way we live our lives and the way technology works — it was the opportunity to rethink how the tax system worked, not just the IT.”
The shutdown means employers and accountants can either file the March employer monthly schedule by April 18th or wait until April 26th without facing any penalties or interest charges. Those who would normally get paid Working For Families on Tuesday April 23 will get it early on Friday. Anyone with a draft they are working on online in the IRD’s system should complete it before the shutdown or they will lose the information.
Naomi Ferguson, IRD
The tax department has cut 770 fulltime jobs and is now half-way through a planned 1500 jobs cull being undertaken as part of its $1.6 billion transformation project.
On Thursday the Inland Revenue Department will close for a week as it migrates 19 million personal tax files on to a new system in the third stage of its overhaul.
But alongside the massive system upgrade, the IRD will slim down as more processes become automated and digitised.
From 6000 staff in 2016, it has already reached the halfway point with the rest due to be cut by 2021.
Naomi Ferguson, Inland Revenue Commissioner, said since the business case had been set out in 2015 it had been helping staff upskill and shrinking through natural attrition.
“As staff have left over the past few years we have used natural attrition to think about how we downsize. We do have quite a large number of staff on short-term contracts at the moment, knowing that actually we won’t need the same number of staff in the long term.”
It has around 1000 staff alone working on the transformation project with testing, training and learning new skills.
Ferguson said short-term contractors were being offered the same training as existing staff and opportunities to learn how to work with new digital technology so they had something on their CV at the end of the process.
Last year it reorganised frontline staff, cutting out a layer of management in the process, and making 140 people redundant.
“One of the reasons why [we did that] with our frontline staff is we wanted to give them the confidence of new roles. They know we have been managing that space and they can see that that is all very visible.”
Ferguson admitted some staff were still questioning what their future was at the organisation.
“Are there still some people thinking where is my future? Of course — there is a whole range.”
She said some had worked for the tax department for 40 years and wanted to see the changes come through and were then happy to move on, but others wanted to stay and see where the opportunities lay.
“Our staff can see how we are managing this to create space and, for many, that has been a reassuring part of it.”