Tax Office was not ready for major IT outage, PwC report finds

An independent review by consulting firm PwC, released this month, found multiple component failures on a key data storage system on December 12, 2016, had caused the significant outage and blocked applications and services being available to members of the public.

In June, a separate report found technicians failed to effectively respond to the outages for nearly four hours, adding to chaos caused by warning and back-up systems that were not fully operational.

The new report found initial actions taken in response to the failure were not successful because of a previously unknown issue with one of the storage network components, a lower than expected "resilience posture" and some features having not being fully implemented.

The response was further hampered by the fact some control, management and monitoring systems were inaccessible because they were dependent on the hardware which had failed.

It said a level of residual risk still exists due to the absence of definitive evidence on the conditions that led to technical failures in the first place.

"Once notified, the ATO initiated escalation and response activities to remediate the issue and restore services as quickly as possible," the report said.

"This response was generally executed in accordance with documented recovery and crisis management procedures, and included working with its service providers who supported the SAN and service management functions.

"Determination of the root cause of these component failures is subject to specific technical analysis which is yet to be completed by the service provider."

A failure to plan for an incident of the nature and scale experienced in the crash had not been explicitly considered by the ATO or its external service providers, resulting in insufficient readiness levels for recovery.

In a statement responding to the report, an ATO spokesman said strong progress had been made to ensure ongoing performance of IT systems.

The PwC findings and a June report into the IT elements and business impacts of a string of recent systems outages are being considered.

"The ATO is well-advanced in implementing the recommendations of both reports, including fixing irritants and enhancing systems performance, refreshing the tax and BAS agent portal to better meet the needs of the tax profession and improving our IT design and governance.

"We will continue to build on this progress in 2018 to provide a better experience for all taxpayers, tax and super professionals, and digital service providers who use our systems," the statement said.

Labor's shadow assistant treasurer Andrew Leigh has called for explanations from the government, blaming 4600 job cuts for the failures.

This year's tax period has seen 11.6 million tax returns lodged to date, up 4 per cent from the same time last year, as well as 8.7 million refunds issued, worth more than $26.3 billion.

The ATO said 81 million pieces of information have been pre-filled in tax returns, up 1 per cent from the same time in 2016.