In today's digital age, one phenomenon is taking centre stage and captivating minds across the globe: Artificial Intelligence (AI), the driving force behind cutting-edge technologies like Chat GPT.
The power of software has taken the world by storm with its ability to help with coding, and writing documents such as this very article.
But is this new AI technology powerful enough to help with taxes in Australia? As central coast accountants we decided to put Artificial Intelligence to the test!
AI systems are like curious learners who dive into vast amounts of data. They use smart algorithms to uncover patterns and special traits within that data. With each round of processing, they put their skills to the test, evaluating their own performance and gaining more knowledge along the way. It's a never-ending journey of growth and expertise!
In this article, we'll focus on two renowned AI writing platforms: ChatGPT and Bing's AI. However, it's worth noting that numerous competitors are emerging, tailored specifically to enhance ChatGPT or to excel in different areas of the ChatGPT software.
AI is currently used in many industries such as digital marketing and software development.
Imagine a robot learning how to become an accountant. Artificial intelligence is like the brain of the robot, helping it think and make decisions. Machine learning is the superpower that allows the robot to learn and improve at accounting all by itself.
Think of AI as the overall concept of creating smart machines that can do human-like tasks. It's like giving the robot a brain to process information and make decisions. On the other hand, machine learning is a specific technique within AI that enables the robot to learn from experience.
Just like you get better at a game by playing it over and over, machine learning lets the robot analyse lots of data, find patterns, and adjust its strategy accordingly. It's as if the robot is constantly practising and getting smarter without anyone telling it what to do.
So, AI is the big picture of creating smart machines, while machine learning is the awesome tool that helps those machines learn and improve on their own. They work hand in hand, making robots smarter and more capable.
In the words of ChatGPT itself:
ChatGPT is an amazing piece of technology that can chat with people and provide helpful information. It's designed to understand and generate human-like text based on the input it receives.
At its core, ChatGPT is a computer program that has been trained on a massive amount of text from the internet, like books, articles, and websites. This training helps it learn patterns and understand language, just like how a person learns by reading and practising.
When you chat with ChatGPT, you can type a message or ask a question, and it will generate a response for you. It uses the knowledge it gained during training to understand what you're asking and to come up with a relevant and helpful reply.
Artificial intelligence has been around before ChatGPT but nothing was as powerful and as broad, or free.
Bings AI (Sydney) is the next most popular AI and is actually built from GPT’s software, the main difference is it is directly connected to Bing’s search engine and will site sources after its responses which counteracts some issues with ChatGPT which we will discuss later.
While ChatGPT is a powerful language model capable of providing information on various topics, it has limitations when it comes to Australian tax advice. As an AI, ChatGPT lacks real-time updates on tax regulations, which may change frequently.
It is important to note that ChatGPTs knowledge cut off in September 2021 (as it constantly states when asking for tax advice) so the advice could be out of date, it will tell you this however in its answers.
With some specific questions about Australian tax advice, it may respond with something along the lines of this:
"As an AI language model, my expertise is primarily based on general knowledge, including US tax regulations. It would be best to consult with a tax professional or refer to the Australian Taxation Office (ATO) for accurate and up-to-date information regarding tax information in Australia"
ChatGPT also will give answers with confidence, even when it is incorrect. This is something you should be mindful of, and always fact-check the information given.
For a test, we thought we would ask it about working from home, as there have been recent tax changes. We started with a simple question: What is the rate you can claim for tax when working from home in Australia?
Here's how the responses stacked up:
We found some of the responses difficult to follow, even as accountants, so we will be using snippets.
ChatGPT was sadly incorrect as it foreshadowed at the start of its response "My knowledge cutoff in September 2021, I can provide you with general information on claiming tax deductions for working from home in Australia. However, please note that tax regulations can change."
It stated this before discussing the methods at the end of the response. ChatGPT was incorrect and was stating the old method to claim the deductions.
It seems from this that ChatGPT can be great for a lot of things, but taxes is something you may want to avoid as laws are constantly changing, and ChatGPT was incorrect in the previous example as its knowledge stopped in September 2021.
Bing AI, on the other hand, came through with the correct answer of 67 cents per hour. It even provides sources, allowing you to visit the websites and verify the information.
However, we must be aware that there's a potential drawback: the possibility of incorrect or outdated data. While Bing AI often cites the Australian Taxation Office (ATO) for tax-related queries, even some ATO pages can be outdated.
Nevertheless, for this specific question, Bing AI got it right. That doesn't mean it is perfect; we will discuss the limitations later.
Artificial intelligence technology has many limitations, especially ChatGPT and Bing AI as they are so new. While ChatGPT is designed to provide answers with confidence, it may not always fully grasp the nuances of questions or completely understand certain topics.
It has the capability to generate responses that sound plausible but could be incorrect or nonsensical. This highlights the importance of fact-checking information obtained from AI systems. OpenAI acknowledges that ChatGPT, like any AI model, can produce flawed outputs.
It's crucial to approach AI-generated answers with a critical mindset and verify the information from reliable sources before accepting it as accurate.
Bing AI is still underpinned by ChatGPT and will make up responses if it is unsure, this has been seen by numerous users. It sometimes relies on generating responses when it is uncertain about the answer.
This behaviour has been observed by many users. While using search engines like Bing can be convenient, it's important to note that search results are not always accurate. It's akin to choosing a search engine over consulting an accountant for tax advice.
In fact, it can be even more problematic because users often take the responses at face value without fact-checking or exploring multiple sources to gain a comprehensive understanding. To ensure accuracy, it's crucial to be diligent, fact-check information, and consider multiple perspectives rather than solely relying on a single search engine result. This is especially true for high-income earners who have more sophisticated and niche tax issues.
At Coleman Financial Group we pride ourselves on being the accountant you can talk to. We understand your circumstances better by asking you the right questions. With artificial intelligence, it takes the human brain out of accounting.
Artificial intelligence can help if you fact-check the information and know the right questions to ask, but a good accountant will ask you the right questions so you can get the deductions you are entitled to.
It can also be reassuring to speak to a human being and can create less stress and more certainty when it comes to getting your tax refund.
Artificial intelligence can best be leveraged in two different ways when it comes to tax filing.
Understanding tax concepts. You can ask ChatGPT to rephrase and simplify certain tax concepts that you can't fully understand, which can help. Of course, to do this you already need to have a snippet of an explanation of a tax concept.
Calculating expenses: Artificial intelligence models can be really good at solving math questions, however, it can have limitations, so it is best to double-check the responses with a professional central coast accountant.
The information provided on this tax blog is intended for general informational purposes only and should not be considered as professional tax advice. While we strive to ensure the accuracy and currency of the content, tax laws and regulations are subject to change, and individual circumstances may vary. We recommend consulting a qualified tax professional or seeking advice from the Australian Taxation Office (ATO) for personalized guidance tailored to your specific situation. The authors and creators of this blog disclaim any liability for errors, omissions, or inaccuracies in the information provided. Use the information at your own discretion, and always exercise caution when making financial or tax-related decisions.