TPB publishes finalised guidance on AI for tax practitioners

“AI has the potential to increase productivity, drive efficiencies and enhance client service across the tax profession when used appropriately,” de Cure said. 

“We want to support tax practitioners in embracing the benefits of AI with confidence, while continuing to meet the high professional and ethical standards set out in the Code.” 

The national body also recognised the fast and ever-changing landscape of AI, with new and emerging technological advancements. 

The TPB discovered that AI capability or functionality included things such as analysing, interpreting, classifying and simplifying information, providing insights, recommendations and tailored chatbot responses, identifying anomalies, autonomously performing tasks or taking actions on a user's behalf, auto-completing tax forms using third-party information, and AI features embedded within software or third-party platforms. 

Speaking to Accounting Times, a representative from TPB was asked how the TPB would assess whether a tax practitioner met their professional obligations if AI gave incorrect tax advice. 

“The TPB’s position is that AI is a tool that may assist tax practitioners, but it does not replace professional judgement or transfer responsibility,” the representative said. 

“If concerns arise about advice provided using AI, the TPB will assess the matter based on the specific facts and circumstances, including whether the tax practitioner met their obligations under the Tax Agent Services Act 2009 and the Code of Professional Conduct, such as exercising competence and taking reasonable care in reviewing and verifying AI-generated content.” 

The board stressed the importance of tax practitioners being responsible for the tax agent services they provide to their clients, understanding the capabilities and limitations of AI tools, and ensuring AI outputs are assessed and supplemented by professional judgement before being relied on. 

The TPB also noted that when incorporating AI into tax agent services, practitioners are needed to evaluate diverse factors tailored to their unique circumstances and the specific nature of the AI system employed. 

As such, TPB recommended tax practitioners to consider the following general factors such as, the nature of the activity to be performed by the AI, how and where information is being stored, the expected use of AI, the ability and limitations of the AI being used, the processes being used to review the output of the AI before being used in practice, and the appropriateness of the AI for the task at hand. 

Another important obligation which was depicted in the guidance statement was confidentiality. 

Under code item six, “unless you have a legal duty to do so, you must not disclose any information relating to a client’s affairs to a third party without your client’s permission”.

This shows that a tax practitioner must not disclose any information relating to a client’s affairs to a third party without the client’s permission. 

In the context of AI regarding tax agent services, tax practitioners must obtain permission from each client prior to disclosing client information to a third party. 

The TPB indicated that ultimately, tax practitioners hold the responsibility for exercising due diligence when employing AI tools. 

This entails performing appropriate reviews of commercial, internally developed, or modified AI applications to ensure data security and compliance with the Privacy Act 1988 (Cth). 

While the TPB supported the adoption of AI to boost productivity, the body stressed that tax practitioners must maintain professional accountability by verifying all AI-generated outputs and ensuring strict compliance with confidentiality and data security obligations.