AI is changing how Australians do their taxes, but experts warn it could backfire if overused. Convenience comes with risk, especially if you’re relying on AI alone.
As tax time rolls around, many Australians are asking whether artificial intelligence (AI) can help them get their tax returns done faster and cheaper. From apps that scan receipts to chatbots that explain deductions, AI may promise to take the complexity out of a traditionally stressful task.
But experts at UNSW Business School say relying too heavily on these tools could come with risks, especially for people with limited tax knowledge or more complex financial circumstances.
Professor Jennie Granger, from the School of Accounting, Auditing and Taxation, says AI can make tax time easier and faster, especially for people with straightforward financial affairs. “AI can be a good starting point,” says Prof. Granger. “It has an impressive ability to analyse issues, apply the law and respond in straightforward language.”
On the other hand, Prof. Granger and others also caution that convenience can come at a cost. “Using ChatGPT to assist with tax returns is likely to be a bad idea for people with limited tax knowledge,” says Associate Professor Sam Kirshner from the School of Information Systems and Technology Management. “When it gets things wrong, you’re the one liable.”
So, what can AI do well? Where does it fall short? And should you trust it with your tax return this year? Here’s what you need to know before handing your finances to a machine.
What can AI do for your tax return?
For individuals with relatively straightforward financial affairs, AI tools that scan statements and receipts to identify income and deductions can save time and improve accuracy, “AI will make it easier for Australians to locate records and thus get their income and deductions right,” says Professor Michael Walpole, from the School of Accounting, Auditing and Taxation. “The advantage is that they will be less likely to miss things and thus under-report income or under-claim deductions. AI can also be used to check a taxpayer’s understanding of the rules.
“The increased AI assistance will be counterbalanced by a decreased need for it as prepopulating of tax forms from data held by agencies that share it with the ATO will leave less to fill in and more to simply check,” he says.
Prof. Granger says that some apps use AI tools to scan receipts and automatically categorise them for deductions. “An example is the ATO’s myDeductions record-keeping tool, which can be downloaded to your phone.
“Once they are in the app, they can then be collated and automatically uploaded to the relevant parts of your return. You are still doing the work of inputting and tagging the records, but they are all in one spot digitally,” she says.
“A bigger step in automation is underway with AI tools that can access your statements digitally, analyse them and provide you with the analysis that you can then upload to your tax return. For small businesses, software such as MYOB uses AI to do this.”
Prof. Granger says that AI tools such as machine learning, natural language processing and predictive analytics are already being used in the ATO’s MyTax platform. “This is used by individuals who do their own tax returns,” she says.
AI also helps personalise returns, prepopulate data, check for errors, and even give nudges to claim overlooked deductions. Prof. Granger says, “The tax return preparation process has become much easier and faster as a result.
“AI also gives taxpayers a nudge if their income or expenses seem out of pattern compared to their past history and checks for errors and calculates the likely tax result,” she says.
Statistics show that these tools are making it easier for many Australians to file their own tax return. As of April 2025, the ATO has received over 14.1 million individual tax return lodgments for 2024, which is a 3% increase compared to the year before.
“Tax agents also have AI built into their tax preparation software and can upload and prepopulate taxpayer information that the ATO holds. Some agents may also offer a virtual service, filing a digital tax return via their website with a virtual (AI) assistant as an adviser with access to a human only if needed,” says Prof. Granger.
The not-so-good side of AI and Tax
Despite the benefits, there are significant limitations. One issue is the accuracy and relevance of the information AI provides, especially if the user doesn’t know enough to verify it.
“ChatGPT’s knowledge base may not reflect recent legislative changes, and its training data tends to overweight older and more established rules,” says A/Prof. Kirshner. “That makes it poorly suited to handling newer provisions or time-sensitive compliance issues.”
Unlike tax agents, AI tools don’t accept liability when things go wrong. “When an accountant or tax platform makes a mistake, you typically have recourse,” says A/Prof Kirshner. “Naturally, OpenAI will not accept liability, making the errors yours.”
Prof. Walpole agrees. “If you get it wrong, you may either pay too much tax or too little. If it is too little, it may be picked up and you will have an amended assessment with penalties and interest,” he says. “The penalties and interest often far exceed the tax shortfall.”
AI tools can also give outdated or irrelevant answers, sometimes for the wrong financial year or even for the wrong country. “You need to be very clear when giving it a search to undertake,” says Prof. Walpole.
Even for tools that analyse your bank statements or receipts, there are limits. Users need to ensure the categories used for deductions are correct and relevant to their return. “It is only as good as your own understanding of what data is in your statements,” says Prof. Granger. “So, it would be wise to use this type of tool to complement your analysis, not replace it.”
There’s also the risk of using generalised advice that doesn’t apply to your circumstances. “AI can be a good starting point,” says Prof. Granger. “But like Dr Google, it does not remove the need for you to exercise your own judgement, including a good dose of scepticism.”
What should you do this tax season?
If you’re considering using AI to help with your return this year, proceed with caution, say UNSW Business academics. While AI tools can offer valuable support, especially for recordkeeping, simple deductions, or understanding broad rules, they are not a substitute for professional judgment.
“Be careful, check its ‘homework’ and understand why it is encouraging you to claim a deduction or a tax rebate,” says Prof. Walpole.
Prof. Granger offers a simple guidance checklist:
- Don’t enter personal information into public AI tools.
- Only use reputable AI software with strong security.
- Double-check AI analysis for errors or omissions.
- Treat general answers as educational, not tailored advice.
- Seek expert help if your affairs are complex.
A/Prof Kirshner says, “Even though I use large language models across many domains, I am personally sticking with my tax accountant. 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.”
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