The Australian Taxation Office does not object to taxpayers using artificial intelligence, but it will not accept AI as an excuse. Speaking at The Tax Institute’s Women in Tax NSW lunch, ATO deputy chief tax counsel Rajitha Srikhanta set out the agency’s position, Accounting Times reported on Friday 30 October.

“For those who use AI, we want to know if they can explain the decision that they’ve reached,” she said. “We’re saying that it’s not reasonable care if you just say AI told me. You need to understand how the sausage was made. What was put in the sausage? How was it pulled together? What came out the other end?”

What the ATO is changing

According to Accounting Times, the ATO is developing guidance on taxpayer use of AI and proposes to update:

  • MT 2008/1, its ruling on the meaning of reasonable care, recklessness and intentional disregard for statement penalties, to explain how “reasonable care” applies where taxpayers use AI;
  • MT 2008/2, its ruling on penalties for taking a position that is not reasonably arguable, to explain how that concept applies where AI is used; and
  • a new fact sheet on proper use of AI in dealings with the ATO, which the agency said may cover using accurate facts, checking outputs against legislation, case law and ATO guidance, and reviewing AI-generated material before relying on it.

The guidance is in consultation, and Ms Srikhanta said a draft could be released around early December.

Humans still sign the declaration

Ms Srikhanta described AI as a potential “great leveller” that can log every step a taxpayer takes, but stressed that the declaration on a return is made by a person. “At the end of the day you make a statement to the commissioner that the information you’re providing is truly correct and you sign a declaration to that effect,” she said.

She likened AI to a new graduate who follows instructions without appreciating the nuances. “If anything, I think humans become more important,” she said. “I think at least for the short and near-term future it’s a hybrid, and AI will help. It will bring speed and scale,” she added. “But people are going to bring context, judgement, and nuance.”

Not just a tax issue

The same theme is surfacing elsewhere. Workplace Express reported on 30 October that a Fair Work Commission full bench had upheld a maximum costs order against an employee who persisted with an unfair dismissal claim, despite knowing he did not meet the qualifying period, because of misguided reliance on AI.

For businesses, the practical message is to treat AI output as a first draft. Keep a record of what was asked, check the answer against primary sources, and make sure someone who understands the rules signs off before anything is lodged.

Sources: Accounting Times (30 October 2026); Workplace Express (30 October 2026). This article is general information only and is not tax advice.