Are Rapid Antigen Tests (RAT) tax deductible? Well, a recent announcement from the government says yes.

Let’s go through it all.

The government announced on 7 February 2022 that they will ensure COVID-19 testing expenses are tax deductible for testing taken to attend a place of work.

This will also mean fringe benefits tax will not be incurred by employers if they provide COVID-19 tests to their employees for this purpose.

This measure is not yet law. As is the normal practice, we will provide more detailed advice and guidance once the measure is enacted.

In the interim, if you have incurred expenses for COVID-19 tests, you should keep a record of those expenses.

Do RAT tests contain GST?

Yes.

If the RAT tests are being used in connection with your business, this GST can be claimed back.

Can a business claim RAT tests?

Generally, yes. If they are being used in connection with your business. e.g for screening staff or clients before entering the premises.

What about FBT?

Fringe Benefits Tax (FBT) will not be incurred, which we love to hear.

The fine print for this is employers must be providing the COVID-19 testing to their employees for work-related purposes.

What we read into this is that businesses may be charged FBT if they are for instance giving away boxes of rapid tests to an employee’s family member. If it isn’t specifically linked to a work related expense, this could be flagged as a fringe benefit.

So while this is a lovely gesture, bear in mind that this means it could be flagged for Fringe Benefits Tax (FBT).

However, it is likely that the minor benefits exemption will apply – assuming that the benefit is occurring at an in-frequent or irregular basis.
As this isn’t law yet, we don’t have all the details on this just yet.

Can I claim a rapid covid-19 test on tax if I need it to go to work?

Work-related COVID-19 test expenses incurred by individuals will be tax deductible.

What if I am working remotely?

The rule in place is the same for all work-related covid tests. Whether you are required to attend the workplace or have the option to work remotely, rapid tests are tax deductible in Australia.

What if it’s for personal use?

If you need a RAT test for personal use, not in connection with your business or job – this is not tax deductible.

An example of this could be for travel requirements, for family members, you don’t have a job, or because you simply can’t access a PCR test.

When will RAT tests be tax deductible from?

This change will take effect from the beginning of the 2021-22 tax year (1st July 2021) and will be in place permanently.