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DEDUCTIBILITY OF COVID-19 TESTS

The Government announced on 7 February 2022 that they will ensure that COVID-19 testing expenses are tax-deductible for testing taken to attend a place of work.

This will also mean fringe benefits tax will not be incurred by employers if they provide COVID-19 tests to their employees for this purpose.

This measure is not yet law. The ATO will provide more detailed advice and guidance once the measure is enacted.

In the interim, if you have incurred expenses in relation to COVID-19 tests you should keep a record of those expenses.

Federal Government Has Made Covid-19 PCR and Rapid Antigen Tests Tax-Deductible

The federal government will make COVID-19 tests tax-deductible for Australian individuals and exempt from fringe benefits tax (FBT) for businesses when they are purchased for work-related purposes.

Key points:

  • PCR tests and RATs will be tax-deductible, backdated to July 1, 2021

  • Australians earning an income taxed at 34.5pc will receive a refund of about $6.90 for every $20 pack of two RATs

  • Small businesses will reduce their FBT liability by about $20 for every dual pack of RATs purchased for $20

Initially, the change will see PCR and rapid antigen tests (RATs) become tax-deductible, but the government intends to include future medically approved tests in the scheme.

The legislation will be in effect from the 2021-22 FBT and income years and will be backdated to July 1, 2021.

Australians earning an income taxed at 34.5 per cent (including Medicare levy) will receive a tax refund of about $6.90 for every pack of two RATs purchased for $20.

Small businesses will reduce their FBT liability by about $20 for every dual pack of RATs purchased for $20 and provided to employees.




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