Client letters and AI data leakage: what leaves an accounting firm when one goes into ChatGPT or Claude.

The client letter is the document most likely to be pasted into an AI tool, because it is the one most staff want help writing. It is also the one that carries the most: identity, figures, bank details, a tax file number and the firm’s own advice. This page marks every item in a routine year-end letter that the firm is obliged to keep confidential, explains the AI confidentiality and data leakage question each one raises, and shows what happens to the same letter on Ermos.

The year-end client letter

Sent to a client once the draft return is ready and before lodgment, listing the points the client has to confirm.

An invented letter. The TFN and ABN are the ATO’s published example values. Hover or tap any highlighted item for the analysis; the full list is below.

What leaves the firm

1. 1
   The client’s identity and address

   Personal information about an identifiable individual, which brings the Privacy Act into play, and the key that ties every other item on this page to a real business. Privacy Act guide.

2. 2
   The ABN

   On its own, public. Alongside the rest of the letter it confirms exactly which entity the figures, the loan and the ATO matter belong to.

3. 3
   Taxable income and tax payable

   Confidential financial information acquired in the professional relationship. APES 110 R114.2 prohibits disclosing it without a legal or professional duty or the client’s authority. APES 110 confidentiality guide.

4. 4
   Bank account details

   A BSB and partial account number for the director’s personal account. Financial identifiers are the information most useful to a fraudster, and the least necessary for drafting a letter.

5. 5
   The Division 7A problem

   The firm’s own advice and the client’s compliance exposure in one paragraph. This is the content the client is paying for confidentiality on, and the item most damaging if it surfaced anywhere else. TPB Code guide.

6. 6
   A second person’s details

   The director’s spouse, named, with her income. She is a separate individual whose personal information the firm holds, and she has not been asked about any of this. Privacy Act guide.

7. 7
   A tax file number

   The TFN Rule permits TFN information to be used or disclosed only for tax, superannuation or personal assistance law purposes, and requires access to be restricted to people who need it for those purposes. Unauthorised disclosure of a TFN can be an offence under the Taxation Administration Act 1953. Tax file numbers guide.

8. 8
   A live ATO matter

   A notice reference, an overclaim and a recommendation to make a voluntary disclosure. Information about a regulator’s attention to a client, before the client has decided what to do. TPB Code guide.

9. 9
   The practitioner and the firm

   The partner’s name and registration tie the whole letter back to a registered agent with statutory confidentiality obligations, and make any leak traceable to the practice. TPB Code guide.

What happens in Frontier Models (ChatGPT, Claude)

• The whole document is transmitted to the provider’s servers. On personal plans the user cannot choose where it is stored or processed, and for the major providers that has generally meant outside Australia, under that country’s legal process. Some business plans offer storage in Australia, but the provider still receives the content.
• On consumer tiers, prompts can be retained and used to train future models.
• The provider’s staff and systems can reach the content under the provider’s own policies.
• Once sent, the firm no longer controls it. Retention and deletion happen on the provider’s terms.

The same document on Ermos

Part of AI data leakage in accounting firms. See how this works in practice: Client letters on Ermos.

Common questions