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No room for social media or AI tools ahead of tax time
As investors adapt their strategies to the new tax settings, an industry body has warned that trusting AI or social media “finfluencers” could land them in hot water come tax time.
Less than two weeks out from a new financial year, investors have been warned to be wary of generic online advice, as it could see them make significant decisions based on misinformation.
Certified Practising Accountants (CPA) Australia tax lead Jenny Wong said the federal budget changes on negative gearing and capital gains tax (CGT) had produced some of the most substantial changes to the tax system in decades.
Wong said that while a misunderstanding of how the tax settings would apply had led to an increasing number of investors seeking help managing their portfolios, they were often chasing a one-size-fits-all answer when one was not available.
“We are already seeing social media content and AI-generated responses attempting to interpret these tax reforms in overly simplistic or, in some cases, inaccurate ways,” she said.
“Tax law doesn’t operate in headlines or short-form videos – and it certainly can’t be applied correctly without understanding the full detail and how the rules interact.”
Wong said that investors should not act on generalised advice from social media or generative AI, as taxation rules become more complex and nuanced post the budget changes.
“What might appear as a simple strategy online could have very different outcomes depending on your individual circumstances.”
Wong said that investors should be particularly careful when following advice on property investment and CGT.
“We’re seeing commentary online from financial influencers (finfluencers) suggesting people should act quickly or restructure their finances based on incomplete interpretations of the budget,” Wong said.
“It’s one thing to promote potential tax savings, but a minute and a half of online commentary rarely captures critical considerations like reservation rules, trustee obligations and long-term compliance.”
While AI tools can provide general information, Wong said they were no substitute for legitimate professional advice, as they lack the ability to apply judgment or understand individual circumstances.
She said that it was particularly important for investors to leverage specific advice to make the most of their portfolios, and that acting on the wrong advice could have significant unintended consequences.
“Importantly, if you rely on incorrect information and your tax return is wrong, you are the one accountable – not the influencer or the platform.”
“With the right advice, you can not only avoid costly mistakes but also ensure you are making the most of the opportunities within the rules.”
When it comes to navigating online financial tips for investors, CPA said it was important to vet the qualifications of the person providing the online tax advice and ensure that it was tailored to the Australian market.
“In a year of significant tax reform, professional advice isn’t just valuable; it’s essential,” Wong said.
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