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Tax Deductibility of COVID-19 Test Expenses

tax deductibility of covid-19 test expenses

Following much anticipation, the government declared that COVID 19 tests, including PCR and RATs (rapid antigen tests), will be tax deductible and free from FBT when acquired for business-related purposes.

This is intended to apply in cases where an individual is expected to report to work or has the choice to work remotely.

From 1 July 2021, you can claim the cost of a COVID-19 Test that you paid for for a work-related reason if you are an employee, sole proprietor, or contractor.

When you can claim COVID-19 testing

From 1 July 2021, to claim a deduction for the cost you incur to pay for a COVID-19 test, you must:

  • use the test for a work-related purpose, such as to determine if you can attend or remain at work
  • get a qualifying COVID-19 test, such as a…
  • polymerase chain reaction (PCR) test through a private clinic
  • other tests in the Australian Register of Therapeutic Goods, including rapid antigen test (RAT) kits
  • pay for the test yourself (that is, your employer doesn’t give you a test or reimburse you for the cost)
  • keep a record to prove that you incurred the cost (usually a receipt) and were required to take the test for work purposes.

 
You can only claim the work-related portion of your expense on COVID-19 tests. For instance, if you purchase a multipack of COVID-19 tests and use some of them for personal use (such as by other family members or for leisure activities), you can only deduct the percentage of an expense that is used for a work-related purpose.

When you cannot claim COVID-19 testing

You can’t claim the cost of a COVID-19 test where any of the following apply:

  • you use the test for private purposes – for example, to test your children before they return to school or daycare
  • you receive a reimbursement for the expense from your employer or another person
  • you work from home and don’t intend to attend your workplace.

 
Also, you are not eligible to deduct your parking or travel costs for taking the COVID-19 test since there is insufficient evidence linking these costs to the COVID-19 Test.

Keeping records for COVID-19 tests

In order to prove that you paid for the test and that it was necessary for work-related purposes, you must retain records of all COVID-19 tests. This could include a bill or receipt as well as documentation from your employer outlining the need for the test.

The ATO will accept reasonable evidence of your expenses if you don’t have a record of them from before the law changed on March 31, 2022. Documents that detail the test’s price and the employer’s requirement to take it qualify as reasonable proof. This might comprise:

bank and credit card statements
a diary or other documents, including receipts, that shows a pattern of buying COVID-19 tests after the law change that could reasonably have applied from 1 July 2021.

If you’d like to learn more about claiming COVID-19 Testing, please contact us or head to the ATO Website for more information.

This page contains information that is of a general nature. It does not take into account your specific requirements or circumstances. Before making any financial decisions, you should consider your individual financial situation, objectives, and requirements, and seek financial advice.


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