Is AI tax advice putting your business at risk?

We’ve seen an increase in the number of businesses using AI in their everyday tasks. AI can draft emails, summarise documents and answer questions in a matter of minutes. But when it comes to tax advice and other important decisions about your legal and financial obligations, relying on AI alone carries real risk for your business.

Confident doesn’t mean correct

One of the biggest problems with AI is that it sounds just as confident when it’s wrong as when it’s right. There’s no change in tone and no warning that the answer might be inaccurate. An answer can be clear and well written but completely wrong.

Without a background in tax, legal or financial matters, it can be hard to tell the difference. If an answer sounds reasonable, or it’s the answer you were hoping for, it’s easy to accept it as correct.

A common example we see

If you ask an AI tool a complicated tax question, it may give you an answer based on Australian, UK or US rules rather than New Zealand’s. It may also refer to rules that have since changed, or mix up GST and income tax treatment. In each case, the answer will still read as though it applies to you.

Acting on that advice could mean claiming expenses you’re not entitled to, missing a tax obligation or making a business decision based on the wrong information. If that happens, you’re still liable for the correct tax, plus use-of-money interest, and potentially penalties. “The AI told me” is unlikely to count as taking reasonable care.

Check the sources

Many AI tools now include references or links to support their answers. That can make a response feel more trustworthy, but it’s worth looking closer. AI can:

• quote a source that doesn’t say what it claims

• take information out of context so it appears to answer your question

• refer to outdated guidance or legislation

• occasionally cite sources that don’t exist at all

Use AI as a starting point, not the final word

AI is a useful tool for getting a general idea of a topic or working out what questions to ask. But for decisions that affect your tax position, your business structure or your legal obligations, it’s no substitute for advice from someone who understands both the rules and your circumstances.

As advisers, we look at the details behind each question, including your business structure and industry, your balance date, your GST basis and your long-term plans. AI won’t take these into account unless you share confidential business information with it, and you should think carefully about which tools you share that information with.

Our recommendations

If you’re using AI to research, here's what we recommend:

• Include New Zealand in your questions - AI tools often default to rules from other countries, so stating where you are makes it more likely you’ll get a relevant answer. This doesn’t guarantee accuracy, so you still need to check the answer.

• Read all the references yourself - Open every source the AI relies on and check that it says what the AI claims it says, that it’s current, and that it applies to New Zealand.

• Don’t rely on one answer - Ask the question in a different way, or check it against a trusted source such as the Inland Revenue website. If the answers don’t line up, that’s a sign to look further.

• Seek professional advice when it matters - If the decision affects your tax, your business structure or your legal obligations, or it’s an area you don’t know well, speak to an adviser before you act.

Check before you act

AI can be a useful starting point but shouldn’t be the conclusion. If you’ve used AI to research a question and want to check the answer is right, get in touch with us. We can review it against current New Zealand rules and your own circumstances, so you can move forward with confidence.

Last reviewed for accuracy 03 November 2026

Disclaimer: The information provided in this article is general in nature and does not constitute tax, legal or financial advice. Talk to us before making decisions based on this content.