We know people turn to AI tools for all sorts of things including when they're getting ready for tax time, and that's not a bad thing in itself. When used well, it can genuinely save time. Used carelessly, it can land you in trouble with Inland Revenue. The difference comes down to understanding what these tools are actually good at, and where they fall over.
Where AI genuinely helps:
When used as an aid for the unglamorous groundwork; pulling together bank statements, sorting expenses into categories, spotting patterns in your spending you'd otherwise miss. If it means your accountant spends less time chasing receipts and more time on the work that requires judgement, that's a win for everyone.
It's also a reasonable starting point if you want a plain-English explanation of how something like deductibility generally works, or how income is typically treated. Think of it as a way to walk into a meeting better informed, not as a replacement for the meeting or your thinking.
Where it gets risky:
Be concerned the moment AI starts making decisions rather than organising information. New Zealand's tax rules are specific, and a lot of AI tools are trained predominantly on overseas, US and UK content. The context of your situation is important, we've seen situations where an AI-generated summary can confidently apply an overseas GST/VAT/Sales Tax treatment that simply doesn't exist here; it wasn't a wild guess, it was stated as fact, with the kind of confidence that makes you trust it when you shouldn't.
That's the core problem with AI tools: they don't know what they don't know, and they'll never tell you that. A trust structure, a relationship property matter, an overseas income question; these depend on the specific facts that apply to you and the intent behind a transaction, and that's a judgement call, not a pattern match.
Always protect your privacy and credentials
Important to note, don't ever put your IRD number, bank details, or passwords into a public chatbot. Once this information is typed in, you've lost control of where it goes. If you're using AI features inside proper tax or accounting software, that's a different and much safer proposition; but the free, general-purpose tools were never built with your financial privacy or personal confidentiality in mind.
Accuracy vs guesswork
If you're missing information for tax your return, AI is not the tool to fill the gap. Guessing a figure because it looks plausible is exactly how penalties and interest charges start.
Know where to draw the line
None of this is an argument against using AI tools; they are useful for the right things. It's an argument for knowing the line between what speeds up the admin and what requires someone using their judgement who's actually accountable for getting it right. AI can help you arrive better prepared, but it can't take responsibility for the answer, ultimately that’s your responsibility.
If in doubt, treat the output as a first draft of your thinking, not a final position and bring it to your advisor before you act on it.
Disclaimer – While all care has been taken, Johnston Associates Chartered Accountants Ltd and its staff accept no liability for the content of this article; always see your professional advisor before taking any action that you are unsure about.
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