Home Forums Stimulus Measures Tax deductibility of COVID-19 tests

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    • #1884

      Earlier today, the Assistant Treasurer issued a media release announcing that the Government will make COVID-19 tests tax deductible for Australian individuals and exempt from fringe benefits tax (FBT) for employers where they are purchased for work-related purposes.

      This follows uncertainty on the tax treatment of polymerase chain reaction (PCR) tests and rapid antigen tests (RATs) following the Prime Minister’s remarks on the Sunrise program on 3 January 2022 that ‘… the tests are also tax deductible’.

      During January and February, The Tax Institute had sought clarification of the Prime Minister’s remarks from the ATO and the Treasury, so it is pleasing that the policy has been clarified.

      The changes to make the tests deductible will apply from 1 July 2021 (from the 2021–22 income year). The changes to make the tests exempt from FBT will apply from 1 April 2021 (from the 2021–22 FBT year).

      We await legislation to clarify some technical aspects of the new rules and guidance from the ATO on substantiation requirements. It is vital that the amending bill is introduced and passed by Parliament during the handful of sitting days in February and March, before the election is called, to ensure that taxpayers have certainty for the 2021–22 income and FBT years.

      What are your thoughts on the Government’s new policy? What do you see as the challenges and issues which you will need to deal with in discussions with your individual and business clients? Keen to read your comments.


      Robyn Jacobson, CTA
      Senior Advocate
      The Tax Institute

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    • #1888

      Would prefer that the provision of tests by employers is specifically excluded from FBT rather than having to rely on the application of the otherwise deductible rule – as the latter necessitates more record keeping and substantiation to get to the same outcome of no FBT.

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