TITLE: Using AI on Your 2025–26 Australian Tax Return? Check Every Claim Before You Lodge
If you are lodging your 2025–26 Australian tax return today, speed is not enough. The Australian Taxation Office (ATO) says using AI is not automatically a problem, but you remain responsible for the claims you submit. An unchecked AI suggestion could lead to a tax shortfall and a penalty, even if you lodge before tonight’s deadline.
The 2 November deadline was previewed in our earlier update, “2 Million Self-Preparers Face 2 November Deadline as ATO Warns of Fines Up to $1,820”. Today’s reminder is simple: check AI-assisted claims before you press submit.
Lodge on time, but do not let urgency replace accuracy
For Australian taxpayers preparing their own 2025–26 return, the deadline is 11:59pm on Monday 2 November 2026. The usual 31 October date fell on a Saturday, moving the deadline to the next business day.
The ATO has now received more than 10 million income tax returns, with around 1 million self-preparers still to lodge in the final days, according to the tax office and press reporting. Self-preparer tax bills are generally due on 21 November 2026.
Missing the deadline can mean a failure-to-lodge penalty of $364 for each 28-day period, or part of one, up to $1,820 for individuals. But meeting the deadline does not protect you from a separate penalty if an incorrect claim creates a shortfall. If you are still checking a claim, take a moment to verify it rather than submitting an answer you cannot explain.
Treat AI as a research assistant, not the signatory
At a Tax Institute panel discussion, ATO deputy chief tax counsel Rajitha Srikhanta said the ATO does not object to taxpayers using AI to support their tax affairs. She described it as a “great leveller” that can log steps and help users understand how they reached a result.
But the taxpayer still signs the declaration that the information provided to the Commissioner is true and correct. Srikhanta said, “it’s not reasonable care if you just say AI told me.” You need to understand what information went into the tool, how it produced its answer and whether the conclusion fits your circumstances.
This is consistent with the ATO’s existing guidance on reasonable care in MT 2008/1. The ATO is proposing to update that ruling to address AI use, and to update MT 2008/2 on reasonably arguable positions. It is also preparing a fact sheet on safe and responsible AI use. Draft guidance could be released around early December 2026; these proposals are not final AI-specific rules.
Check each AI-assisted claim before lodging
Use this quick review to avoid relying on a confident-sounding but unsuitable answer:
- List every claim AI helped you consider. Check each against the relevant information on ato.gov.au and your own records. Save the ATO guidance and evidence you relied on, not just the chat.
- Verify the facts and conditions. Confirm dates, amounts, eligibility requirements and the tax treatment for your specific situation. AI can miss details that change the result.
- Question answers in high-risk areas. For example, a rental property cost may be a repair or an improvement; the 12-month rule matters for the CGT discount; crypto-to-crypto swaps can be disposals; and conventional clothing is generally not deductible just because your employer requires you to wear it.
- Leave out claims you cannot support. If you are unsure, check with a registered tax agent or contact the ATO. A cautious, supportable return is better than an unsupported claim.
Already lodged? Correct an error early
If you have already lodged and spot a mistake, do not wait for the ATO to contact you. Check how to correct your return through ATO online services linked to myGov, and make a voluntary disclosure as soon as possible.
The ATO says an eligible disclosure made before it notifies you of an examination can generally reduce the base penalty by 80% for a shortfall of $1,000 or more. For a shortfall under $1,000, the penalty can be reduced to nil when the disclosure is made early, subject to the applicable conditions. See the ATO’s voluntary correction guidance. A reduction in penalty does not remove the tax and interest you owe.
For false or misleading statements that result in a shortfall, the ATO’s penalty guidance sets a base penalty of 25% of the shortfall for failing to take reasonable care, and 50% for recklessness. The outcome depends on the circumstances; an AI error does not automatically mean a penalty applies.
Apply the same checks to business tax work
Australian businesses should not limit this review to individual returns. BAS, business tax returns and bookkeeping software can all involve automated suggestions or transaction categories. A tool may propose a GST treatment or categorise a purchase, but you remain responsible for checking the result and the declaration you make.
A registered tax agent safe harbour may apply in specific circumstances if you supplied all relevant information and an error resulted from the agent’s failure to take reasonable care. It is not automatic protection for every AI-assisted return. Read the ATO’s safe harbour guidance and keep your records.
FAQs
Can I use AI to help prepare my Australian tax return?
Yes. The ATO does not object to taxpayers using AI, but you must check its output and be able to explain the tax position you declare.
What should I do if AI helped me make a claim I cannot verify?
Check the claim against ATO guidance and your records. If you still cannot support it, leave it out or ask a registered tax agent or the ATO before lodging.
What if I find an AI-related mistake after lodging?
Correct it promptly through ATO online services and consider making a voluntary disclosure before the ATO contacts you. Eligible early disclosures may reduce the penalty, but tax and interest may still be payable.
Sterlinx Global is a Global Tax Compliance Suite supporting Australian entities with bookkeeping, tax calculations, GST and other tax filings, and year-end compliance. You provide your data; we complete compliance work through a structured, ongoing process. Book a call with our team to discuss support for your business.