COVID-19 RATS Tests Tax Deductibility
Rapid Antigen Tests (RATs) have become a product common in homes and workplaces around the country, employed to limit the potential spread of COVID-19.
The expense of these single-use tests however made their purchase costly to employees and employers who were required to prove that they were fit to work.
However, in February 2022, the Federal Government announced that RATs used for COVID-19 testing will be tax deductible, but only if they were used to test before attending a place of work.
These will also be exempt from fringe benefits tax (FBT) for businesses if they have been purchased for work-related purposes.
There’s a lot of information circulating around about how the tax deduction is set to work. Here’s what has been clarified so far that you can take with you into your 2021/2022 tax returns:
- Any test that has been bought in the 2021/2022financial year can be claimed IF there is a record of the purchase.
- The FBT liability of a business would be decreased by $20 for a dual-pack of RATs, while a person on more than $45,000 (at a tax rate of 32.5%) would receive around $6.50 back in tax for a two-pack of RATs that’s worth around $20.
- This legislation will be in effect from the 2021/2022 FBT and income years and will be backdated to July 1 2021.
- This means that any test that was purchased after July 1 will be covered, but not tests that were bought before that day (even if the purchased test was taken in July).
In the interim, if you have incurred expenses for COVID-19 tests, you should keep a record of those expenses. Much like you would for any tax-deductible expense, receipts of any purchase of RATs need to be kept and noted.
It needs to be noted that RAT tests are only able to be claimed presently if they were bought for work-related purposes. If the tests were purchased for personal use, they are not currently able to be claimed on your tax return.
