Australian tax cuts prove a trial for payroll

Von Julian Bajkowski

While Australians were cheering the July 1 introduction of personal tax cuts contained in the Federal Budget, it was a serious payroll headache for a PeopleSoft user.

Instead of rejoicing, the PeopleSoft customer was debugging a beta version of its payroll software upgrade.

Almost every payroll in Australia required adjustment to accommodate the new tax changes, resulting in a raft of modifications for both payroll and financial software which came in the form of maintenance upgrades or patches.

With the tax cuts announced on May 10 2005 and swinging into force on July 1, IT managers and vendors had only seven weeks to code-up, deliver and hard-test any upgrades.

According to a source, who requested anonymity, problems involving PeopleSoft version R8 and the tax cuts quickly emerged when their enterprise installed an upgrade supplied to them by the vendor to adjust marginal tax rates.

Specifically, the R8 upgrade contained a tax calculation table populated with incorrect data which would have sent out incorrect pay amounts to employees had it been allowed to run. The enterprise concerned has more than 1000 employees on its books.

The source said the problems were the last thing they had been expecting from what they feel should have been a routine upgrade.

According to a spokesman for Oracle, which finalized its US$10.4 billion hostile takeover of PeopleSoft in June 2005, the problem has been an isolated one.

"We have worked closely with a few select customers to test the tax update prior to making it available to other customers. During the test cycle an issue with two marginal tax rates - relating to foreign workers and to aged pensioners - were identified by a customer and immediately rectified by Oracle Development," an Oracle Australia spokesperson said.

"After completing the test cycle the correct tax update was posted to the customer section of Oracle"s Web site. The "beta" version of the tax update was never posted to the Oracle Web site and was therefore never available for download."

The spokesperson added Oracle had beta-tested the upgrade on three Australian customers with the intention of identifying any problems.

Calls to some of Australia"s largest PeopleSoft users appear to confirm the bug"s early isolation with both the Commonwealth Bank saying it had not experienced any problems regarding the upgrade. Similarly, the Department of Defence is understood to have successfully implemented the upgrade.