Federal government’s move to make COVID-19 testing tax-deductible

Treasurer Josh Frydenberg confirmed the federal government would look to ensure COVID-19 testing expenses are tax-deductible for testing taken to attend a place of work, giving businesses and individuals more clarity and assurance.

The government 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.

Tax payers who intend to claim a RAT deduction need to take reasonable approaches. 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?

It would be no surprise that the ATO is 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.

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 tax payers of the importance of good record keeping.

MNY Group Chartered Accountants provide tailored advice and service to our business clients. We prepare audit-ready work paper and tax reports for our clients to achieve the best possible results in the event of a tax audit.