AI in Tax Compliance and Planning: Revolutionising Tax Practice

Australian tax accountants are experiencing a fundamental shift in how they deliver services to clients. What once required hours of manual data entry, document review, and research can now be accomplished in minutes through AI-powered tools. This transformation is not just about efficiency – it's reshaping the entire value proposition of tax practices, enabling professionals to move from compliance-focused work to strategic advisory services.

The Scope of Automation in Tax Tasks

The extent of automation now possible in tax preparation is remarkable. Thomson Reuters research shows that AI-powered document processing technology can scan even the lowest quality, unstructured documents and extract, identify, organise, and import data into relevant forms within minutes – work that previously required hundreds of task hours annually.

This automation has made the concept of the "no-touch tax return" a reality for many firms. AI systems can now automatically extract and analyse data from receipts, invoices, and tax forms, dramatically reducing the time needed to prepare returns and financial statements. According to Wolters Kluwer research, AI technology enables the automation of data handling and entry processes, saving professionals significant time while reducing human error.

The technology goes beyond basic data entry. Machine learning algorithms can learn from past transactions to correctly categorise new ones, reducing the need for manual intervention. AI systems can scan documents, interpret their contents, and enter information directly into accounting software with remarkable accuracy.

Leading Firms Embrace Advanced AI Solutions

The accounting profession's adoption of AI is accelerating rapidly. Thomson Reuters has launched CoCounsel, an agentic AI platform designed specifically for tax, audit, and accounting professionals. Unlike traditional automation that follows pre-defined sequences, agentic AI can plan, reason, act, and react – operating inside real workflows to complete complex, multi-step assignments.

According to Elizabeth Beastrom, President of Tax and Accounting Professionals at Thomson Reuters, "The tax and accounting profession today faces unprecedented challenges – from talent shortages to regulatory complexity to rising client expectations. Agentic AI offers a transformative solution."

CoCounsel automates real work – from client file review to memo drafting and compliance checks – while providing explainable outputs. It connects firm knowledge, Checkpoint research tools, IRS code, and internal documents into a single AI-guided workspace.

Major accounting firms are making substantial investments. RSM US LLP announced a $1 billion investment over three years to integrate advanced automation across operations and client services, building on existing AI infrastructure for tax automation and audit enhancement.

AI-Enhanced Tax Research and Modelling

One of AI's most powerful applications lies in tax research and scenario modelling. Thomson Reuters' Checkpoint Edge AI Assistant uses generative AI to help tax and accounting professionals orient themselves to tax topics and find answers more quickly, with each answer supported by credible citations from trusted content.

Wolters Kluwer research found that managers spend 8-15% of their time on complex research tasks, followed by time spent summarising results and drafting client communications. Remarkably, 78% of accountants said if research summaries could be easily generated using AI, it would add high value, with many indicating it could save hours or days of research time.

AI can now:

• Summarise dense research and present highlights in simple business terms
• Generate client communications about specific tax situations in understandable language
• Integrate seamlessly with tax software so professionals don't need to stop mid-return to research questions
• Monitor real-time tax events and cross-reference client data to flag those affected

This capability is transforming how firms approach tax planning. Rather than reactive compliance work, AI enables proactive identification of tax-saving opportunities and risks before they materialise.

Transforming Client-Facing Tax Planning Services

The shift from compliance to advisory represents the most significant change in tax practice. According to Wolters Kluwer, "While AI isn't replacing accountants and tax practitioners, it can act as a powerful companion, helping guide decision-making, augment existing capabilities, and highlight valuable data that previously may have been missed."

When AI handles routine compliance tasks, professionals can focus their expertise on complex situations that require human judgement. This transformation is already delivering results – research shows that 49% of high-growth firms are more likely to offer advisory services as a core offering.

AI-powered solutions can now identify which clients are impacted by triggered tax events, enabling firms to proactively reach out with advice and secure additional advisory engagements. Armed with AI-generated tax event summaries and client letters written in plain language, tax advisers can explain changes and set up strategic planning sessions.

The technology enables firms to offer more personalised services by analysing client financial data to identify trends, detect anomalies, and suggest optimisation strategies. This level of insight was previously available only to clients who could afford extensive manual analysis.

Skills and Competencies for the AI-Enhanced Tax Professional

Wolters Kluwer's research emphasises that "the continuing development of soft skills is still required for accountants and tax practitioners to be regarded as the trusted adviser for their clients or employers."

The most successful tax professionals in the AI era will combine technical proficiency with strong client relationship skills. While AI handles data processing and routine research, human expertise remains essential for:

• Professional judgement in interpreting AI-generated insights
• Client communication and relationship management
• Strategic thinking about tax planning opportunities
• Quality control and validation of AI outputs
• Ethical considerations in AI implementation

Firms must also consider compliance with professional standards. As noted in Wolters Kluwer's analysis, Australian accountants and tax practitioners using generative AI must navigate the legislative provisions of the Tax Agent Services Act 2009 and regulatory guidance from APES 110 Code of Ethics.

The Competitive Advantage for Early Adopters

Early adopters of AI in tax practice are already seeing significant advantages. Future of Professionals Report data shows that tax and accounting professionals predict AI could free up four hours per week within one year, increasing to eight hours per week in three years, and 12 hours per week in five years.

This time saving translates directly into capacity for higher-value work. Firms can take on more clients without proportionally increasing staff, or dedicate more time to advisory services that command premium pricing.

The client benefits are equally compelling. Research shows that 59% of professionals see opportunities for handling large volumes of data more effectively, while 47% see immediate opportunities for improving client response times.

Looking Forward: The AI-Powered Tax Practice

The transformation of tax practice through AI represents more than technological advancement – it's a fundamental reimagining of how tax professionals create value. By automating routine compliance work, AI frees practitioners to focus on strategic advice, relationship building, and complex problem-solving that truly differentiates their services.

For Australian tax accountants, the message is clear: AI is not a threat to traditional practice, but an opportunity to elevate it. Those who embrace these tools thoughtfully and responsibly will find themselves well-positioned to thrive in an increasingly competitive and sophisticated marketplace.

The future of tax practice isn't about replacing human expertise with artificial intelligence – it's about augmenting that expertise to deliver unprecedented value to clients while building more sustainable and profitable practices.