An investigation into the time-saving benefits of using a computerised taxation program

Abstract

Software programs designed to calculate the tax liability of individuals and other types of tax entity are being designed and used with increasing frequency. Research done in the United States of America appears to indicate that these programs do not achieve any saving in time and, in fact, may take longer to use than to complete a tax return by hand. As the South African revenue collection system appears to be moving closer to a self-assessment system, where the calculation of tax owing will be the responsibility of the taxpayer, the research essay sets out to determine whether there is a saving in time when calculating a tax liability using a tax software program, instead of calculating it by hand. In addition, the research aims to determine how much time, on average, is saved or lost, using such a program, and whether there is any correlation between the time taken to perform a calculation by hand and that using the software program. It does so by comparing the average estimated time it would take to complete tax calculations for individuals by hand with the average time taken to complete the same tax calculations using a tax software program. The average time taken to do the calculations by hand is based on the time allocation given for questions by the authors of a published question bank for university students. The time taken using software is determined by using a stop-watch to time each question being processed. The results, subject to assumptions made in carrying out the research, show that there is a substantial saving in time using the software program. Based on the data, however, the results indicate a weak correlation between the estimated time taken to do a calculation by hand and the estimated time using the software program. Possible reasons for the weak correlation are discussed. A recommendation is also made for the standardization and certification of existing tax calculation software