Last Updated on 13/08/2025 by Damin Murdock
As Artificial Intelligence (AI) increasingly automates critical decisions and facilitates direct interactions with individuals. Organisations in Australia face a pressing question of when is the involvement of AI systems legally required to be disclosed? While specific AI disclosure laws are still emerging, existing principles of transparency and administrative decision-making in Australia create clear obligations for businesses leveraging AI.
At Leo Lawyers, we guide businesses through the AI governance challenges. We help our clients navigate the continuously evolving intersection between AI and law. This article clarifies the specific triggers for AI disclosure and outlines essential considerations for your organisation.
The Imperative of Transparency in AI Systems
For organisations deploying AI, transparency is important, particularly when AI systems impact individuals or serve as direct user interfaces. Australian legal principles expect general openness, and this applies directly to AI’s role in decision-making and interaction. If an AI system is involved in a decision that affects an individual, or if it is the primary interface for a user, the details of that AI’s involvement become relevant. Importantly, the potential for disclosure to cause embarrassment or a loss of confidence does not override the requirement for transparency. This means organisations must be prepared to communicate how their AI systems contribute to determinations that affect people.
Key Disclosure Triggers for AI-Driven Processes
Specific situations necessitate the disclosure of AI’s involvement, drawing from established legal principles that now apply to automated decision-making and user interactions:
- AI Impact on Personal Information
When an AI system collects, processes, or uses personal information for automated decisions or user interactions, this inherently triggers disclosure obligations. Disclosure of such personal information is typically required when its use directly aligns with the original collection purpose, the individual could reasonably expect the disclosure, or it is essential for preventing serious threats to life or health. Thus, organisations must transparently communicate the AI’s role in personal data handling.
- AI in Public-Facing Operations and Automated Decisions
Disclosure may also be necessary when an AI system forms part of agency operations that the public should reasonably know about, or when disclosure would inform the public about how automated decisions are made. This principle extends to AI systems used by government agencies or organisations performing public functions, where transparency in operations serves a broader public interest and aligns with information access requirements.
Navigating AI Disclosure: Essential Considerations for Your Organisation
Proactive strategies are crucial for organisations to meet their evolving disclosure obligations for AI systems.
- Limitations on Disclosure:
Organisations should be aware that disclosure cannot be made subject to conditions in response to access applications. While commercial confidentiality needs careful balancing, it does not automatically override the need for disclosure regarding AI systems’ impact on individuals or public interest considerations.
- Best Practices for AI Transparency:
It is considered best practice to ensure clear transparency about AI-driven automated decision-making processes. Organisations should proactively communicate any new or unexpected uses of AI that might affect individuals or their data. Furthermore, a clear understanding of the public interest implications of AI deployment is crucial for determining appropriate disclosure levels.
- Practical Implementation for AI Systems:
Developing clear disclosure policies specifically for AI systems is highly recommended. Organisations should maintain thorough documentation of all AI-related decisions and processes, particularly how automated decisions are reached and how user interactions are managed. It is also important to consider privacy implications in conjunction with transparency requirements to ensure a holistic approach to responsible AI governance.
Conclusion
While a dedicated AI disclosure law is still developing in Australia, existing principles of administrative transparency and information disclosure strongly indicate that organisations have an implicit obligation to be open about their AI use, particularly when it impacts individuals through automated decisions or direct user interactions. Proactive adherence to these principles not only mitigates legal risk but also builds essential trust with users and the wider public.
At Leo Lawyers, we provide expert legal advice on tech related legal questions. Feel free to contact Damin Murdock at Leo Lawyers via our website, on (02) 8201 0051 or at office@leolawyers.com.au. Further, if you liked this article, please subscribe to newsletter via our Website, and subscribe to our YouTube , LinkedIn, Facebook and Instagram. If you liked this article or video, please also give us a favourable Google Review.
DISCLAIMER: This is not legal advice and is general information only. You should not rely upon the information contained in this article and if you require specific legal advice, please contact us.
Damin Murdock (J.D | LL.M | BACS - Finance) is a seasoned commercial lawyer with over 17 years of experience, recognised as a trusted legal advisor and courtroom advocate who has built a formidable reputation for delivering strategic legal solutions across corporate, commercial, construction, and technology law. He has held senior leadership positions, including director of a national Australian law firm, principal lawyer of MurdockCheng Legal Practice, and Chief Legal Officer of Lawpath, Australia's largest legal technology platform. Throughout his career, Damin has personally advised more than 2,000 startups and SMEs, earning over 300 five-star reviews from satisfied clients who value his clear communication, commercial pragmatism, and in-depth legal knowledge. As an established legal thought leader, he has hosted over 100 webinars and legal videos that have attracted tens of thousands of views, reinforcing his trusted authority in both legal and business communities."
