New tax return warning on using AI that could cost you thousands

Experts have raised red flags about a popular new resource that millions of Aussies are eyeing to help at tax time. See why and experts’ tips.

Forget boring tax returns – we could potentially be on the cusp of a financial revolution where Artificial Intelligence is not just a futuristic fantasy, but a new tool to help overcome tax season headaches.

While more than half of Australians are eyeing AI to streamline their tax returns, and according to financial comparison site Compare Club, 17 per cent are already harnessing its power for financial management, experts are have issued a word of caution: AI is a good starting point, but not a replacement for a human brain.

The not-so-good side to putting your trust (and data) into AI

While the allure of AI for tax time is strong, experts have raised red flags when it comes to using general-purpose AI models like ChatGPT for your intricate financial affairs.

Sam Sakred, Head of Development at Copilot HQ, warns that these models simply aren’t trained for the complex world of tax law.

“The model itself will be very confident,” Mr Sakred said.

“But the question is whether this data is correct or is it giving you data from the last trained model.”

AI is a good starting point, but not a replacement for a human brain when it comes to tax returns, experts warn. Picture: AFP

Beyond accuracy, there’s a serious privacy concern.

Aditya Rudraraju, the director of Copilot HQ, strongly warned against sharing sensitive data online.

“I wouldn’t recommend putting your financial status or financial data in public versions of ChatGPT,” Mr Rudraraju said.

AI users will also need to take responsibility for when things go wrong.

Associate Professor Sam Kirshner from UNSW’s Information Systems and Technology Management programs said when AI makes an error – it is on you. And mistakes could cost you thousands of dollars if you get audited by the ATO.

“When an accountant or tax platform makes a mistake, you typically have recourse,” he said. “Naturally, OpenAI will not accept liability, making the errors yours.”

Where AI can help in your tax strategy

So, if full tax return delegation to AI is off the table, where can this powerful technology genuinely save you time, stress, and potentially, money?

The answer lies in using AI as an intelligent assistant, not an autonomous agent. AI can help expense tracking, creating detailed logs of work-related costs like uniforms or mileage.

“AI will make it easier for Australians to locate records and thus get their income and deductions right,” Professor Michael Walpole, from UNSW’s Accounting, Auditing and Taxation sector said.

AI can possibly help save you time with tax returns, such as help with expense tracking, creating detailed logs of work-related costs like uniforms or mileage.

What are some AI tools that you can download?

Financial tasks can be tedious so tools like: QuickBooks – for receipt scanning – and Frollo – for bill prediction – are good to help keep track. Another example is the ATO’s myDeductions record-keeping tool – which can help categorise all receipts automatically for deductions.

Will AI replace accountants?

No, AI will not replace the role of accountants any time soon. While AI can reshape the work by eliminating the need to do repetitive tasks, it cannot provide professional judgment and maintain a client relationship like a human can. AI does not have the capacity for ethical reasoning or the ability to explain certain impacts on an evolving business model or family’s financial future. “Our goal is not to ever replace accountants,” Mr Sakret said.

“If anything, we just want to empower them.”

AI is unlikely to replace the role of accountants any time soon.

General tips for this tax season

If you are considering using AI to help you with your tax returns, UNSW business academics have put a list together a simple guidance checklist to help:

– Do not put personal data into public AI.

– Only use AI software that is reputable with strong security.

– Double-check AI answers for errors or omissions.

– Consider the information from AI as educational instead of tailored advice.

– Go to experts if you have complex affairs.

“In short, AI can be a powerful helper, but it’s not yet a reliable replacement. When it comes to your taxes, it pays to stay informed, cautious, and critical,” Prof Kirshner said.

Originally published as New tax return warning on using AI that could cost you thousands