The Inland Revenue has partnered with US company Fast Enterprises to update New Zealand's tax and social policy administration system, with work expected to begin in July.
According to Greg James, Inland Revenue Change deputy commissioner, initial tasks will be the detailed design of streamlined digital services for PAYE and GST information collection.
Ultimately, the new system will run the core tax and social policy administration and will progressively replace the existing FIRST system.
The new system will make paying taxes easier, reduce compliance costs and effort, and make introducing policy changes easier and more cost-effective for Government, says James.
He says Fast Enterprises was selected after an exhaustive evaluation process that included demonstrating how a new system would deal with Inland Revenue's most complex customer scenarios, as well as seeing Fast's solution operating successfully at other tax agencies.
Todd McClay, Revenue Minister, says, “Key individuals from Fast Enterprises were also instrumental in building our original software, FIRST, and that system has performed well for more than twenty five years.
“This will also bring the timedown from ten years to under eight and see the cost lower to near the bottom end of the forecast - at around $1.3 billion.
"I will be working with Inland Revenue to find further efficiencies and expect the cost could be as low as $1 billion."
Inland Reveue has acknowledged the significant cost of the project and the importance of getting it right.
"Modernising New Zealand's tax service is a significant government investment of taxpayer money.
"We're closely following similar complex business transformations, both in New Zealand and overseas, to learn from their successes and mistakes.
"We're making absolutely sure we get it right with robust planning, programme management and a staged roll-out.
"While we plan long-term system change, we must keep our current systems operating to keep New Zealand's economy running," a statement on the Inland Revenue site reads.
James says the Inland Revenue has begun extensive communications with business, tax agents, accountants, banks, software developers, individuals and other government agencies.
For instance, Xero, MYOB and other software providers are working with Inland Revenue to simplify processes for small businesses.
“The sheer scale and importance of this programme means we will source expertise both locally and internationally,” says McClay.
James says, "Modernising New Zealand's tax system is high on the Government's business growth agenda.
"Importantly, it will allow us to link our systems across government and the private sector, fit revenue processes seamlessly into customers' lives, and use information more intelligently.
"It will help deliver significant benefits to businesses and individuals, and create opportunities for public and private sector interests to work together to improve taxpayer and customer experiences."