Loss of e-Tax work squeezes sales at DWS

DWS expects to take a revenue hit as the ATO replaces its tax platform.

The ASX-listed IT services firm reported that four percent of revenues will be affected by the retirement of Australia’s e-Tax software.

The e-Tax system is being replaced by an online application developed and maintained by the ATO; DWS will continue to provide e-Tax support services in the 2016 financial year.

The new myTax system, which replaces the old system in 2016, automatically pre-fills forms with information from employers, banks and the government.

Microsoft and IBM partner DWS has developed and supported the system for 10 years, including a three-year, $10 million contract extension in 2009.

DWS company secretary James Hatherley downplayed the impact, saying the IT company had diversified its revenue base in recent years. In a statement, he said DWS is “actively pursuing new ‘design-build-run’ opportunities” with existing and new clients.

Introduced in 1999, e-Tax was described earlier this year as a “pioneer of electronic lodgement” by ATO chief Chris Jordan. A Mac version of the software was made available in 2013.

Initially available for people with straightforward tax returns, the new myTax system will be available for around 5 million people for tax time in 2015. It will be expanded over the following year.

The plan to retire e-Tax follows a challenging period for DWS, which saw net profit after tax fall to $5.1 million for the first half of the 2015 financial year, a 24 percent decrease compared with the same period a year earlier. Revenue was down by $1.1 million to $46.8 million, a 2 percent fall.

On a positive note, the company reported no debt and $16 million in cash.

The half-yearly results followed a $14.6 million fall in revenue for the 2014 financial year to $94.4 million, with net profit down by 23 percent to $12.9 million.

Chief executive Lachlan Armstrong resigned April, with chairman Danny Wallis taking over the role for the foreseeable future.