The Tax Office cannot guarantee it will begin tax time 2017 on July 1 as it scrambles desperately to save this year's tax return program from the fall-out of its disastrous pre-Christmas online meltdown.
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The agency has abandoned much of its IT program for this year and can only say it is "confident" that businesses and taxpayers will be able to lodge and receive tax returns on the day after the end of the financial year.
ATO insiders believe the office should be able, just, to avoid having to postpone tax time 2017 but it will come at the price of much of its technological program for the year.
In the wake of the recent tech failures, the peak tax accountancy body, the Tax Institute, said on Tuesday that its members had lost confidence in the ATO's systems.
The finances of millions of Australian taxpayers and businesses could be thrown into chaos if the Tax Office failed to be ready to receive tax returns on the July 1.
The revenue agency's online systems collapsed disastrously in mid-December, causing prolonged outages and again on Thursday, even as technicians from the ATO and Hewlett Packard, the multinational tech giant which supplied the failed systems, continued to work of restoring capacity.
Despite the Tax Office's public statements since the December 12 disaster, the worst IT incident in its history, it has not disclosed the full extent of the damage to its systems.
But Fairfax can reveal that one of the agency's key computer "domains" was so badly hit that the ATO has still not recovered its test and development capacity, plunging its work program for 2017, including the tax return plans of millions of workers and businesses, into uncertainty.
The situation is so serious that ATO technical leaders were told to drop other projects as they scramble to salvage tax time, and three other key jobs, with the stark warning: "Tax Time 17 development will be delayed".
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Internal documents reveal that the ATO's ability to implement the Coalition government's legislative program has also taken a serious hit and there is no timetable for the full restoration of capacity.
"Development & Test Environments are not available," the internal memo from late-January reads,
"Business Impacts of this are: 1. Any ongoing IT project is unable to proceed with testing, 2.This will impact any legislative changes, 3. Tax Time 17 development will be delayed."
The ATO's leaders nominated four priority projects, with tax time 2017 the clear number one.
They also named the Coalition's superannuation reforms, the development of the "single touch payroll system", both pet projects for Minister for Financial Services Kelly O'Dwyer, and a streamlined online business registration system, as the other programs to be saved.
But all other IT projects in the massive organisation have been left in "limbo", one source told Fairfax.
"IT Leaders need to consider impacts to projects that may not be delivered and establish contingency plans," ATO officials were told in a mid-January internal email.
In response to questions from Fairfax, ATO chief information officer Ramez Katf confirmed the "development environments" of the office's systems were not fully restored, but said the office was committed to delivering tax time on time.
"We are confident that taxpayers will be able to lodge their returns and receive refunds from 1 July," Mr Katf said.
"We are very aware of the expectations of the community and stakeholders regarding the availability of our systems, and fully recognise that delivering Tax Time 2017 is the most important work we are committed to deliver this year."
