Tax office fumbles lost super

The Australian Taxation Office (ATO) has been criticised by the Australian National Audit Office (ANAO) for having updated its technology systems in a fashion which simply replicated the previous deficiencies identified in the working of the superannuation Lost Member Register (LMR).

In a report on the LMR tabled in the Parliament late last week, the ANAO said that of the 5.8 million accounts recorded on the LMR at 30 June, 2010, the ATO has been able to link 4.9 million accounts, through each account holder's tax file number, to 3.7 million people identified in its tax administration systems.

However, it said this left approximately 900,000 accounts valued at some $1 billion that are considered to be 'unmatched'.

"These unmatched accounts represent the core of the lost superannuation issue that the LMR was established to address," the ANAO report said.

Dealing with the ATO's handling of the issue, the ANAO report said the implementation of the LMR within the ATO's "easier, cheaper and more personalised" system (Change Program) completed in April 2009 had provided an opportunity for the ATO to re-examine and re-engineer its processes for administering the LMR.

"However, this opportunity was not fully exploited, and the current systems reflect a number of inherent shortcomings," the audit report said. "For example, the Tax Office identified data quality issues as a risk to its management of the LMR, but placed considerable reliance on technological updates provided by its Change Program system implementation to manage these risks, rather than addressing the difficulties caused by the existing reporting arrangements.

"As a result, the Tax Office has developed the new LMR on the basis of existing processes, which resulted in the implementation of a system that replicates old problems in a new environment," the ANAO report said.

The ATO has accepted a number of the recommendations flowing from the ANAO report.