Using AI? Let's talk professional obligations.

 “I’ll just use AI for this.”

It’s a phrase echoed in accounting firms across Australia every day. What started as an interesting plaything has rapidly become a necessary tool for servicing clients in a high-pressure environment.

But here is the reality: the moment you decide to use AI, the Tax Agent Code of Professional Conduct enters the room. Failure to understand how these tools handle data and failing to get proper client consent could put you in direct breach of your professional obligations. Elfworks is designed to help you meet these obligations without slowing your practice down.

In March 2026, the Tax Practitioners Board (TPB) released TPD D26/2026, a draft guidance specifically addressing how the Code applies to AI. Here is a breakdown of the three key stages of AI use and where the risks lie.

1.     The input: Where does the data actually go?

When you prompt a Large Language Model (LLM), upload a document, or paste a meeting transcript, that information leaves your controlled environment. For a moment, that client data is no longer "yours", it belongs to a processing chain managed by a third party. Depending on the tool, client data might be routed through overseas infrastructure, stored temporarily in the US or other jurisdictions for "abuse monitoring” and used to train future iterations of the model (unless explicitly opted out).

If you don’t know exactly what happens to client data once you hit "enter," you cannot claim you have taken reasonable steps to protect it.

If your engagement letter doesn't obtain informed consent for this specific data flow, you are on shaky ground.

The TPB’s D26/2026 makes it clear: the use of AI does not displace your obligation to understand the system. You cannot simply "trust the brand name"; the Code expects professional judgment based on an actual understanding of data flows.

2.     The output: the "hallucination" hazard

The LLM doesn’t "know" tax law. It predicts the next likely word based on patterns. This leads to three major risks: hallucinations (making up fake case law), bias, and over-confidence.

TPD D26/2026 reinforces that AI is a tool, not a replacement. If an AI-generated memo cites a non-existent authority or misses a critical nuance in the tax code, the liability doesn’t rest with the software company. It rests with you.

Acting professionally means verifying every citation and ensuring the output reflects the specific facts of your client's case.

3.     The Workflow: Delegation vs. Abdication

When you copy AI output into a client email or lodged position, you are making a professional choice. By doing so, the Code assumes:

·       You have read and understood the output in full.

·       You have tested it against the facts.

·       You have considered alternative approaches.

If you haven't done these things, you aren't using AI as a tool—you are allowing it to stand in for the work the Code requires you to do. The TPB is pushing firms toward process-based compliance. It isn’t enough to say "someone looked at it." You must be able to demonstrate a system of supervision where human judgment is the final gatekeeper.

How Elfworks helps you comply

The promise of AI in tax practice isn't that it replaces the accountant; it’s that it empowers them. However, the administrative burden of staying compliant with TPD D26/2026 can be hard to demonstrate without the right systems.

Elfworks is built specifically for the Australian accounting landscape. We help you bridge the gap between innovation and the Code of Conduct by:

·       Data Sovereignty & Transparency: We provide the clarity you need regarding where data goes and how it is protected, so you can confidently fulfill your duty of care.

·       APES 320 Report: The Elfworks platform records every use of AI within your firm, time-stamped and named, allowing you to produce an APES 320 Report at a click of a button.

·       Supervision Frameworks: Elfworks is designed to support a "Human-in-the-loop" workflow, making it easy to document your review and verification process.

·       Learning + AI: The Elfworks platform allows you to create and complete Learning modules based on AI advice and research.

Don’t let the efficiencies of AI create a compliance nightmare. Use a platform designed with your professional obligations in mind. Ready to see how Elfworks can safeguard your firm? 

Contact us at info@elfworks.ai to start your trial today.

Elfworks is the most accurate AI tax platform in Australia, designed to transform the way accounting firms work. By harnessing multiple enterprise-grade AI models and over 70,000 Australian tax documents, including legislation, case law, ATO rulings, and private guidance, Elfworks delivers fast, reliable, and bias-free advice. The platform streamlines research, automates routine tasks, and builds firm-wide knowledge through hyper-personalised CPD, freeing accountants to focus on high-value client work while ensuring compliance and quality at every step.

Trusted by over 300 Australian accounting firms, Elfworks turns complex workflows into efficient, accurate, and profitable processes.