# Federal government to make COVID-19 PCR and rapid antigen tests tax deductible



## Jack Malarkey (Jan 11, 2016)

ABC Australia

*Federal government to make COVID-19 PCR and rapid antigen tests tax deductible - ABC News*








amp.abc.net.au

Sunday 6 February 2022, 11.00 pm AEDT

*Federal government to make COVID-19 PCR and rapid antigen tests tax deductible*












_The Treasurer said the change would bring COVID tests in line with other work-related expenses.(AAP: Lukas Coch)_

The federal government is set to make COVID-19 tests tax deductible for Australian individuals and exempt from fringe benefit 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 32.5pc will receive a refund of about $6.50 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 will 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 32.5 per cent will receive a tax refund of about $6.50 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.

Treasurer Josh Frydenberg is set to announce the changes to tax legislation in a speech to the Australian Industry Group on Monday morning, the start of the first parliamentary sitting week for 2022.

…

Mr Frydenberg said the move to make PCR and RATs tax deductible brought COVID-19 tests "in line with other work-related expenses".

"COVID-19 tests are an important tool being used by businesses to protect their workforce and to ensure they can keep their doors open and our supply chains running," he said.

"As the pandemic has evolved so has our response, and by making common sense decisions like this, we are making it easier for households and businesses to get on with their lives."

Currently, in some situations where COVID-19 tests are purchased and used as a preparatory step, for example a retail worker using a test before going to work, rather than for use while working and earning money, the expense may not be tax deductible.

The amended law will clarify that all COVID-19 tests purchased for work-related purposes will be tax deductible for Australians and exempt from FBT for businesses.

…


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## Jack Malarkey (Jan 11, 2016)

See also:





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The government has announced COVID tests will be tax deductible — here's how to claim them - ABC News







amp.abc.net.au


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## Jack Malarkey (Jan 11, 2016)

_Accountants Daily_

Tuesday 8 February 2022

Emma Ryan









Accountants back move to make COVID-19 testing tax-deductible


Professional accounting bodies have welcomed the federal government’s move to make COVID-19 testing expenses tax-deductible and FBT exempt.




www.accountantsdaily.com.au





*Accountants back move to make COVID-19 testing tax-deductible *

Professional accounting bodies have welcomed the federal government’s move to make COVID-19 testing expenses tax-deductible and FBT exempt.

In an address to Australian Industry Group on Monday (7 February), Treasurer Josh Frydenberg confirmed the federal government would look to ensure COVID-19 testing expenses are tax-deductible.

“Since the start of 2022, the Government has secured more than 80 million Rapid Antigen Tests for delivery in January and February for use in Aged Care and other high‑risk settings. Our government is taking action to remove uncertainty around the tax treatment of these tests,” the Treasurer said.

“Today, I’m announcing that we will ensure that COVID‑19 testing expenses are tax deductible for testing taken to attend a place of work, giving businesses and individuals more clarity and assurance.

“We will also ensure that fringe benefits tax (FBT) will not be incurred by employers where COVID‑19 tests are provided to employees for this purpose.”

The move on RATs has been welcomed by CPA Australia, which called for it in its budget submission.

“We welcome the decision to make RATs tax deductible and FBT exempt. This will help business and employees manage the workplace costs of COVID-19 compliance,” said Elinor Kasapidis, senior manager tax policy at CPA Australia.

“This is good news, and we expect practitioners will want to let their clients know about the changes.”

While CPA Australia backs the decision on RATs, Ms Kasapidis noted that “there are a few traps for the unwary which we’d encourage practitioners to warn clients about at the same time”.

“This decision doesn’t create carte blanche to purchase RATs on the government’s dime. Business and employees still need to jump [through] a few hoops to access this tax relief,” she explained, adding that there must be “a nexus to work to claim this deduction or FBT exemption” as private usage is unlikely to be covered by the legislation.

“Tax agents must take reasonable care to ensure a RAT deduction or FBT exemption is valid. In the case of a business client, they should be mindful of the size and nature of the business. Is the number of RATs purchased proportionate and does it seem reasonably necessary?”

Looking ahead, Ms Kasapidis noted she expects the ATO to be on high alert in respect to unusual RAT expense claims come tax time. For example, an employee who has spent most of the year working from home, but is claiming a deduction for a large number of RATs, may raise suspicions, she flagged.

“The enabling legislation has yet to be enacted, although this may come soon as there aren’t many parliamentary sitting days left before an election is likely to be called. Practitioners should keep an eye out for the legislation, and check the details when it’s published, as well as any ATO guidance which is issued subsequently,” Ms Kasapidis advised.

“The legislation will be backdated to 1 July 2021. Business clients are likely to have records to substantiate their claims, however, employees who have previously purchased RATs may not have held onto receipts. This is an opportunity to remind clients of the importance of good record keeping.

“Employees may need to be reminded that this tax deduction won’t provide a dollar for dollar refund of the cost of purchasing the RAT, so they will still be out of pocket.”

Tony Greco, general manager technical policy at the Institute of Public Accountants (IPA) also welcomed the government’s move to make COVID-19 tests tax-deductible and FBT exempt, noting that it removes the “uncertainty” being felt by practitioners and their clients.

“We have yet to receive detailed wording of the legislative changes but if his comments are followed through it will remove some of the angst and need for employers to seek professional advice to ascertain whether any of the existing FBT exemptions could apply. The existing FBT rules are antiquated and cannot deal with these new emerging issues and underlies a bigger systemic problem with the FBT regime which is another story for another day,” Mr Greco said.

“It is also good news for employees if they can deduct the cost of procuring RATS for work purposes as this was problematic under existing tax rules.

“What we need to see now is the details to ensure the words match the legislative outcome so that we can get on to more important matters and remove all the uncertainties associated with the cost of procuring RAT’s for both employers and employees.”


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