By Editor Stephen Johnson
The BIG change coming to tax returns and the biggest mistake Aussies are making now
UNSW expert predicts AI could do tax returns
By STEPHEN JOHNSON, ECONOMICS REPORTER FOR DAILY MAIL AUSTRALIA
Published: 15:03 BST, 2 July 2025 | Updated: 15:03 BST, 2 July 2025
Australians are increasingly turning to AI to do their tax returns hoping to save hours of time on boring paperwork.
The new financial year often brings dread, with income taxpayers required to sift through dozens and dozens of receipts to make work-related claims.
But large language models with analytical skills have the ability to go through all these dockets and determine whether work expenses can be legally submitted on a tax return.
The Australian Taxation Office’s myDeductions app keeps digital receipts in one place, enabling an AI app to go through the expenses and put together a claim.
H&R Block’s director of tax communications Mark Chapman admitted artificial intelligence was an increasingly popular way of doing tax returns.
‘There is a growing use of AI in tax return preparation, particularly amongst self-lodgers – for example, using it to determine whether you are entitled to a work-related deduction based on your income,’ he told Daily Mail Australia.
University of New South Wales Professor Jennie Granger, from the School of Accounting, Auditing and Taxation, said artificial intelligence could be useful for basic tax returns, with the ATO’s MyTax platform already helping individuals.
‘AI can be a good starting point,’ she said. ‘It has an impressive ability to analyse issues, apply the law and respond in straightforward language.’
Australians are increasingly turning to AI to do their tax returns hoping to save hours of time
‘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.’
An AI app could submit items worth up to $300 and determine they were used for work purposes, making it claimable in one financial year.
It could also figure out if someone who worked from home during the last financial year could claim 70 cents an hour as a flat rate.
Or the AI robot could manually calculate the costs of heating a room and accordingly work out the annual expenses of a home office.
Artificial intelligence is already being used help small business operators analyse their expenses and new AI apps are doing this for individuals.
‘Once they are in the app, they can then be collated and automatically uploaded to the relevant parts of your return,’ she said.
‘You are still doing the work of inputting and tagging the records, but they are all in one spot digitally.
‘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.’
The Australian Taxation Office’s myDeductions app keeps digital receipts in one place, enabling an AI app to go through the expenses and put together a claim
UNSW tax law expert Professor Michael Walpole said AI could be useful in finding those receipts for work-related items.
‘AI will make it easier for Australians to locate records and thus get their income and deductions right,’ he said.
‘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鈥檚 understanding of the rules.’
But Mr Chapman said ChatGPT was prone to making mistakes, based on an individual asking it the wrong question.
‘Self-preparers are particularly prone to use using these open-source AI programs and I would recommend using them with caution or not at all,’ he said.
‘Errors in algorithms or user input can lead to incorrect tax returns, which can result in penalties, fines, or even audits.
‘Having said that, the use of AI is increasing every year as people try to use it as a short cut to prepare their tax return but nothing beats getting a human tax expert for some accurate tax advice.’
University of New South Wales Professor Jennie Granger, from the School of Accounting, Auditing and Taxation, said artificial intelligence could be useful for basic tax returns
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Danger of submitting tax return too early
While the 2024-25 financial year ended on Monday, the tax office doesn’t start issuing refunds until the second week of July.
Also, pre-filled information based on employer group certificates and private health fund details often aren’t ready yet either, which could lead to incorrect tax returns being submitted.
‘Doing your tax return in the first week of July is not recommended,’ Mr Chapman said.
‘In addition, much of the pre-fill information is not available to the ATO in the first few days of July and this can lead to inaccurate tax returns being lodged, and possibly the need to amend your return later on, because you might have forgotten to include an item of income which wasn鈥檛 correctly recorded in the ATO pre-fill.
‘Better to wait until mid-July, when the banks, employers, health funds, etc have all reported your data to the ATO and there is much less chance that you forget to include crucial details.’
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The BIG change coming to tax returns and the biggest mistake Aussies are making now
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