For business owners and investors, spare time is scarce. It is hardly surprising that many people now rely on AI tools such as Chat GPT for quick tax guidance on deductions, super contributions or structural ideas. The responses appear confident, arrive in seconds and cost nothing. What might possibly go wrong? Quite a bit.
Australia’s tax and superannuation environment is detailed, highly dependent on individual facts and subject to constant change. AI technology can be a handy starting point but using it as the basis for real decisions can leave you exposed to reviews, penalties and unintended financial consequences. We are increasingly seeing cases where AI-generated guidance has led clients down the wrong path and requires professional correction.
Where AI Can Assist (and Where It Falls Short)
AI is very capable of explaining simple concepts in everyday language. It can outline what negative gearing involves, describe the difference between concessional and non-concessional contributions, or remind you to think about documentation. Rely in AI tools in tax can save time and help you prepare more focused questions.
The difficulty begins when AI shifts from general explanations to something that resembles advice.
Tax and super outcomes depend on your individual circumstances—your income, business structure, age, residency, assets, timing, and long-term objectives. AI tools do not have access to these factors unless you disclose them, and in most cases you should not. Even when detailed information is provided, they cannot exercise professional judgement or weigh risks and trade-offs in the way an experienced adviser can.
The Accuracy Problem: Authoritative, yet Incorrect
AI platforms are known to “hallucinate”, producing statements that sound convincing but are wrong or incomplete. In practice, this can involve:
• Recommending deductions that are unavailable in your situation.
• Calculating capital gains tax incorrectly or overlooking integrity provisions.
• Suggesting super strategies that exceed caps or failing eligibility tests.
• Citing legislation, cases, rulings or concessions that are outdated or entirely fictional.
To a non-expert these mistakes may be invisible, but they are usually obvious to the ATO, the courts and seasoned practitioners.
A recent decision of the Administrative Review Tribunal highlights these dangers. In Smith and Commissioner of Taxation [2026] ARTA 25, the taxpayer appeared to depend on AI tools to locate authorities supporting their position, and the Tribunal dismissed that approach. Some of the cases were imaginary, while others were irrelevant to the issue at hand.
If the user of the tool fails to confirm the cases exist and read them to check relevance, “the Tribunal’s resources are being wasted, as the Tribunal must look for cases that don’t exist and read cases that have no relevance at all”.
ATO Attention is Increasing, not Decreasing
The ATO is not hostile to AI—they use it themselves for analytics and fraud detection. However, for taxpayers, the ATO’s misinformation guidance makes clear that using AI in tax may deliver false, inaccurate, incomplete or outdated material. Their message is simple: check everything or accept the consequences. Surveys indicate many businesses seek AI accounting assistance first, only to have professionals unravel the problems later, burning extra time and money.
ATO AI transparency statement | Australian Taxation Office
Protect yourself from misinformation and disinformation | Australian Taxation Office
Where inaccuracies are identified, the ATO typically revises the return, charges interest, and may also apply penalties—regardless of whether the mistake arose from misunderstanding or from relying on AI-generated tax information rather than any deliberate action.
This issue is becoming particularly apparent in areas such as working-from-home expenses, rental property claims, and compliance obligations for SMSFs.
Superannuation: High Stakes, Minimal Room for Error
Super is an area where AI suggestions can be particularly hazardous. Self-managed funds operate within strict boundaries. AI frequently misses matters such as eligibility, timing, purpose requirements and investment limits. The consequences can include breaches, forced reversals of transactions and penalties that reach thousands of dollars.
Errors in super can also cause permanent damage to retirement savings.
Data Security and Privacy
There is another practical exposure people often forget: entering personal or financial data into AI systems. Once the information is submitted, control over how it may be stored or used is lost. The privacy and fraud risks are simply not worth accepting.
A Better Way: AI with Professional Guidance
AI delivers the greatest value when used as a research and learning tool rather than as the final authority. It can help build general knowledge, but any significant tax or superannuation decision should be assessed in the context of your full financial position and long-term objectives.
In our practice, we encourage clients to ask questions early, explore potential strategies, and discuss them with us before taking action. Addressing issues upfront is almost always simpler and far less costly than fixing problems after the fact.
The bottom line is straightforward: AI can be useful in tax, but it is not your accountant. When safeguarding your wealth and maintaining compliance, personalized professional advice remains critical.
Need Help?
By working with us as your professional tax accountant and mortgage broker, you can be confident that your loans are structured to protect your tax position, maximise deductions, and avoid costly mistakes, giving you greater peace of mind and more control over your financial future.
Pitt Martin Group is a firm of Chartered Accountants, providing services including taxation, accounting, business consulting, self-managed superannuation funds, auditing and mortgage & finance. We spend hundreds of hours each year on training and researching new tax laws to ensure our clients can maximize legitimate tax benefit. Our contact information are phone +61292213345 or email info@pittmartingroup.com.au. Pitt Martin Group is located in the convenient transportation hub of Sydney’s central business district. Our honours include the 2018 CPA NSW President’s Award for Excellence, the 2020 Australian Small Business Champion Award Finalist, the 2021 Australia’s well-known media ‘Accountants Daily’ the Accounting Firm of the Year Award Finalist and the 2022 Start-up Firm of the Year Award Finalist, and the 2023 Hong Kong-Australia Business Association Business Award Finalist.
Pitt Martin Group qualifications include over fifteen years of professional experience in accounting industry, membership certification of the Chartered Accountants Australia and New Zealand (CA ANZ), membership certification of the Australian Society of Certified Practising Accountants (CPA), Registered Australia Tax Agents, certified External Examiner of the Law Societies of New South Wales, Victoria, and Western Australia Law Trust Accounts, membership certification of the Finance Brokers Association of Australia Limited (FBAA), Registered Agents of the Australian Securities and Investments Commission (ASIC), certified Advisor of accounting software such as XERO, QUICKBOOKS, MYOB, etc.
This content is for reference only and does not constitute advice on any individual or group’s specific situation. Any individual or group should take action only after consulting with professionals. Due to the timeliness of tax laws, we have endeavoured to provide timely and accurate information at the time of publication, but cannot guarantee that the content stated will remain applicable in the future. Please indicate the source when forwarding this content.
By Sally Tran @ Pitt Martin Tax
