Dext launches AI Assist as accountants warn of tax errors

Dext has launched Dext AI Assist in Canada, aimed at bookkeepers and accountants, as accountants report correcting errors made when clients use general-purpose AI tools for tax advice, including guidance based on U.S. rules rather than Canadian law.

Practitioners say jurisdiction is a recurring problem. Clients arrive with answers generated by consumer AI services that sound plausible but do not reflect Canadian tax rules.

"During tax season, we had a business owner come in convinced that a certain tax planning technique would work for them. They had done some research using an AI tool and came in fairly confident in the answer. When we asked where the idea came from, they showed us the prompt and response from the AI model. The issue was that the guidance clearly related to U.S. tax rules, not Canadian tax law. The client understandably didn't realize the distinction, but the strategy would not have applied to a Canadian resident and could have created filing issues if implemented. It was a good example of how AI tools can generate convincing explanations, but tax advice is extremely jurisdiction-specific, and the models don't always recognize the difference unless the user is very precise," said Darren Lewis, Partner and CPA, Douglas Spence & Associates.

Missing context

Another issue is context. Accountants say AI-generated answers can appear technically sound while missing details that shape the final tax outcome. The tools often provide broad recommendations without considering how a business owner actually operates, draws income or structures activities.

"While AI is a powerful tool for generating tax insights, it often generalises or provides incomplete answers. Tax planning and interpretation require nuance and a full understanding of the client's situation, something AI doesn't always capture,"  said Tom Son, VP Operations, ConnectCPA.

"For example, AI may suggest that incorporating is beneficial due to lower corporate tax rates. However, without considering key factors-such as how corporate and personal tax integration works, how and when cash will be extracted, the nature of the business activities, and how the owner will be compensated-the recommendation can vary widely. In practice, the right answer could range from not incorporating at all to implementing a multi-entity structure." 

"As users refine their prompts, AI responses may become more accurate, but often still lack full clarity. This can create a gap in expectations between business owners and their accountants. Ultimately, AI outputs do not necessarily replace professional judgment-effective tax interpretation depends on analyzing specific facts, understanding context, and applying experience to real-world situations," Son continued.

The comments reflect a broader tension in accounting over the use of AI. Firms are exploring ways to automate routine work, but tax advice remains highly dependent on individual facts, local rules and professional judgment.

Dext describes AI Assist as a specialised AI agent for accountants and bookkeepers in Canada. It says the system is designed to keep automation transparent, controlled and reviewable, while leaving accountants in charge of how it is used.

Costly errors

Errors in categorising transactions can also have immediate financial consequences. One accountant described a case in which an AI tool processed bank statement data in a way that appeared reasonable but failed to identify personal spending mixed with business costs.

"We onboarded a client doing $1 million in revenue, newly incorporated, where the owner previously ran personal items through the business bank account. He used an AI tool to categorize what he stated were his business revenues and expenses based on bank statements, which it did, but it neglected to question whether any of the expenses were personal. It would have only known this based on a relationship with the client. It also assumes business owners know what is meant by 'business revenues and expenses', when often a discussion is warranted to educate, understand and then recommend. None of the expenses looked unusual in the data (payments to a leasing company, property management company, etc.). The AI categorized them exactly the way anyone would if all you had was the bank feed, and it underestimated the tax liability by thousands of dollars. The only way to know some of these expenses were personal is to know the client and ask them the questions," said Moez Bawania, Partner and CPA, AMLB LLP.

"That context comes from the relationship, not the data. An AI tool processing bank transactions based on specific prompts will do what it is told. Our value-add as experts is in the judgment we exercise to ask the right questions and provide personalized advice that keeps our clients out of trouble," Bawania added.

Examples cited by Canadian accountants suggest that AI's current use in tax work is creating both new efficiency opportunities and a new review burden. Rather than replacing advisers, the tools are prompting more checks on source assumptions, tax residency, expense treatment and the facts behind each recommendation.

For firms and clients, the practical question is becoming less about whether AI can produce an answer than whether that answer reflects the right jurisdiction, the full set of facts and the consequences for the person filing the return.

Dext's entry into the Canadian market with AI Assist places it in that debate as accountants warn that plausible automated advice can still leave taxpayers exposed to filing issues or understated liabilities worth thousands of dollars.