The explosion in AI use across Australia is spreading into tax returns as accountants notice a surge in deductions for paid AI service subscriptions.
With the cost of AI subscriptions typically ranging between $30 and $300 a month, depending on usage and the level of technology, the potential tax deduction can total thousands of dollars a year, although this comes with some warnings from the Australian Taxation Office.
Chartered accountant and ** Mr Taxman founder Adrian Raftery** said that, in the three weeks since
began, he had seen a significant rise in people claiming deductions for AI subscriptions, “easily the most noticeable spike”.
tax time“I am seeing people using AI to help with work templates, writing business reports, responding to messages, sorting data – even for using with work-related studies and organising their tax affairs,” Raftery said.
“Two years ago these deductions were non-existent.”
Workers and business owners pay for subscriptions for premium AI tools including ChatGPT Plus, ** Claude Pro, Claude Max** and Midjourney for efficiency, speed and large complex projects.
Rise in AI deductions
H&R Block director of tax communications Mark Chapman said the tax accounting group was “absolutely” seeing a significant rise in AI-related deductions.
“A year or two ago AI wasn’t really a thing, but now if you’re using it for research or anything like that you can claim the subscription quite easily, obviously only the work-related part, because you’ve spent that money in the course of earning your assessable income,” Chapman said.
He said that, provided people could substantiate their use of AI for work with written records, they were “fine to claim it”, and he expected claims to climb further in the future.
“The number of people using AI as part of their job these days has absolutely exploded, so I certainly suspect this trend will become even more pronounced over the next 12 to 24 months,” he said.
Raftery said he also expected a big jump in future work-related AI claims as the use of the technology ramped up.
“There is a lot out there yet to try AI for their work,” he said.
“It will grow but perhaps at not the same extent as mobile phones and internet claims in the last two decades as there will be pockets of occupations, for example factory workers, who probably will not have the need for it in their roles. Famous last words Mr Taxman!”
An ATO spokeswoman said AI subscriptions could generally be claimed by workers when the subscription was directly related to earning their income.
She said to claim the work-related proportion, the subscription must be paid for by the taxpayer and not reimbursed, must be used for job duties and not just personal interest, and the AI use must be recorded to prove the expense.
“When you use the items for both private and work purposes, you need to apportion your deduction,” the spokeswoman said.
“You can only claim the work-related use of the item as a deduction.”
To support their claim, taxpayers should keep receipts or invoices showing payment, a usage log or diary showing how much the AI was used for work, and examples of work tasks completed using AI, she said.
The ATO has an ** online guide explaining technology-related tax deductions** for computers and software.
However, taxpayers should not use AI to do their tax returns, with accounting group CPA Australia warning that this could lead to incorrect claims, poor financial decisions and unintended tax consequences.
CPA Australia tax lead Jenny Wong said AI tools could provide general information but did not apply judgment.
“They don’t understand your individual circumstances, and they don’t replace professional advice,” Wong said.
“If you rely on incorrect information and your tax return is wrong, you are the one accountable.”
*This article first appeared in The Australian as *.
Tax deductions for AI tools jump: experts on what you need to know
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