Can an AI agent find your tax deductions?
Yes, with a caveat. An AI agent connected to cited retrieval over 34,500+ ATO documents can map the deduction categories that fit how you work, show the ATO source for each and list the records you need. It cannot lodge for you, and amounts stay your decision.
What can a sole trader usually claim?
The general rule sits in section 8-1 of the ITAA 1997: expenses you incur in earning your business income, to the extent they are not private or capital. For 2025-26 the common categories are:
- Home office running costs: the fixed-rate method allows 70 cents per work hour for 2025-26, or you can claim the work share of actual costs with records.
- Tools and equipment: business assets are depreciated, and for 2025-26 assets under $20,000 could be deducted in full under the instant asset write-off (the 2026-27 threshold is not yet legislated).
- Motor vehicle and travel: cents per kilometre or logbook, for the business share of vehicle use.
- Phone, internet and software: the portion used for the business, apportioned on a reasonable basis.
- Insurance, professional fees, bank fees and subscriptions connected to earning your business income.
Which of these actually apply, and what evidence each needs, depends on your structure and how you operate. That matching is the part an agent does well.
What does the agent actually do when you ask?
Connected to ato-mcp, your agent calls deduction_discovery: a deterministic tool that walks a curated map of deduction categories built from ATO guidance, matched to the tax profile you saved once (sole trader or company, GST registered or not, home based or not). It returns the categories that plausibly apply, confidence-rated, with the records each one needs and the ATO source cited on every line. You read the sources, not the model's memory.
What won't it do?
It won't lodge your return, decide amounts, or tell you to claim something. It surfaces categories, rules and sources; the numbers come from your records, and material decisions still belong with a registered tax agent. The difference is you arrive with the citations instead of the question.
The questions everyone asks
Is this tax advice?
No. ato-mcp is information infrastructure: it retrieves published ATO material and runs fixed, cited calculations. It does not consider your full circumstances and it is not a registered tax agent service. Verify material decisions with a registered tax agent.
Which AI agents can find deductions this way?
Anything that speaks MCP: Claude Code, Claude Desktop, ChatGPT, Codex, Gemini CLI, Cursor and VS Code all connect to the same endpoint. The agent you already use asks the questions; ato-mcp supplies the cited tax knowledge.
Does the agent see my bank account or receipts?
No. ato-mcp reads a tax profile of about 25 fields you save (business structure, GST registration and so on), nothing else. You describe your spending in the conversation; the tool matches it to deduction categories and returns the sources.
How current are the answers?
The corpus is rebuilt monthly from ato.gov.au, the Federal Register of Legislation and law.ato.gov.au, and withdrawn rulings are flagged. Every passage carries its publication date, so the agent can prefer current guidance and say which year a rate belongs to.
Related reading: What can you actually claim?, So you bought a laptop in the EOFY sales and Can AI do your BAS?