For many business owners and investors, time is limited. It is becoming increasingly common to use AI tools such as ChatGPT to get quick answers on tax deductions, super contributions or structuring ideas. The responses are fast, sound confident and cost nothing.

It can feel like an easy win.

However, there are some real risks that need to be understood.

Where AI can be useful

AI tools can be helpful when used to explain general concepts. For example, they can break down topics like negative gearing, explain the difference between concessional and non-concessional super contributions, or highlight the importance of keeping good records.

Used in this way, AI can save time and help you ask better questions.

Where the risk begins

Problems arise when AI shifts from explaining concepts to providing advice.

Tax and super outcomes depend heavily on your personal circumstances. Factors such as your income, structure, residency, timing and long-term plans all play a role. AI tools do not properly understand this context, and they are not designed to apply professional judgement or weigh competing risks.

Even if detailed information is entered, there are also privacy concerns to consider when sharing sensitive financial data.

Confident answers are not always correct

One of the key risks with AI is that it can produce answers that sound authoritative but are incorrect, incomplete or out of date.

In practice, this can lead to:

• Claims for deductions that do not apply
• Incorrect capital gains tax calculations
• Super strategies that breach contribution caps or eligibility rules
• References to legislation or cases that are inaccurate or no longer relevant

These errors are often difficult for non-experts to detect but are usually obvious to the ATO and professional advisers.

A recent Administrative Review Tribunal decision highlighted this issue. In Smith and Commissioner of Taxation [2026] ARTA 25, the taxpayer relied on AI-generated case references. Some of those cases did not exist, while others were irrelevant. The Tribunal made it clear that failing to verify this information wastes time and undermines the process.

ATO expectations are clear

The ATO is not opposed to the use of AI, and in fact uses it internally for data analysis and compliance activities. However, they are very clear on one point: taxpayers are responsible for the accuracy of their own returns.

The ATO has specifically warned that AI-generated information may be false, incomplete or outdated, and that it must be independently verified.

You can read more here:
ATO AI transparency statement | Australian Taxation Office
Protect yourself from misinformation and disinformation | Australian Taxation Office

If errors are identified, the ATO may amend your return, apply interest and impose penalties, regardless of whether the mistake came from AI or not.

We are increasingly seeing issues arise in areas such as work-from-home claims, rental property deductions and SMSF compliance.

Superannuation: high risk area

Superannuation is particularly sensitive.

Self-managed super funds operate under strict regulatory rules, and even small errors can result in significant consequences. AI tools often miss critical factors such as eligibility, timing requirements and compliance tests.

The outcome can include penalties, the need to unwind transactions, and long-term damage to retirement savings.

Privacy matters

Another often overlooked risk is data security. Entering personal or financial information into AI platforms can expose that data to storage and usage outside your control. This creates potential privacy and fraud risks that should not be ignored.

A practical approach

AI can be a useful starting point, but it should not be relied on to make financial decisions.

The most effective approach is to use AI to build understanding, then seek advice that takes into account your full situation before acting.

At Indigo Financial, we encourage clients to raise questions early and test ideas before implementation. In most cases, this approach is significantly more cost-effective than correcting mistakes later.

The bottom line

AI can be a helpful tool, but it is not a substitute for professional advice.

When it comes to managing your tax obligations and protecting your long-term financial position, tailored advice remains essential.

Contact Indigo Financial on (08) 8212 8585 if you need help with any of your accounting, taxation and business development needs.

Note: The material and contents provided in this publication are informative in nature only. It is not intended to be advice and you should not act specifically on the basis of this information alone. If expert assistance is required, professional advice should be obtained.