As the end of financial year looms, Australians are preparing to fill out their tax returns. It’s no secret that purchasing COVID tests can be an expensive ordeal, but the Adelaide Taxation Office (ATO) has implemented new legislation to ease that burden.
On 31 March 2022, new legislation was implemented which states that if you’re an employee, sole-trader or contractor and you have paid for a COVID-19 test for a work-related purpose, you can claim that on your tax.
All PCR and Rapid Antigen Tests are tax deductible. This change takes effect from the beginning of the 2021‑22 tax year, which means you can claim any test you purchased from 1 July 2021 in this year’s tax return.
In order to claim your test(s) on tax, you will need to prove that you paid for the test (receipt or invoice) and demonstrate that it was required for work (any correspondence).
If you don’t have a record of your expenses before the law changed on 31 March 2022, the ATO will accept “reasonable evidence” of your expenses. For example, bank and credit card statements or a diary/document which shows a pattern of test-buying.
Once you calculate how much you can claim, enter the amount at “Other work-related expenses” in your tax return and write “COVID-19 tests” in the description.
When you can claim
To claim a test you had after 1 July 2021 on tax, you must have:
- Used the test for a work-related purpose,
- Had a PCR test or other test on the Australian Register of Therapeutic Goods (i.e. a RAT test),
- Had to pay for it yourself and you weren’t reimbursed by your employer, and
- Kept a record (i.e. receipt) to prove you incurred the cost and were required to take the test for work purposes.
If you buy a multipack of COVID-19 tests and use some for private purposes, you can only claim the portion you used for work-related purposes.
When you can’t claim
You can’t claim a test on your tax return if:
- You use the test for private, non-work-related purposes,
- Your employer reimbursed you already, or
- you work from home and don’t intend to attend your workplace.
The travel or parking expenses you incur when you get your COVID test is not tax deductible because “these expenses don’t have a sufficient connection to you using a COVID-19 test”.
For more information, visit the ATO website.
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