EOFY: how to claim Covid expenses as a tax deduction

Catching Covid-19 is gruelling and inconvenient and even the suspicion that you’ve caught it is stressful. With RAT and PCR tests expensive, it’s a small relief to know that many of the most commonly incurred expenses related to Covid-19 can be tax deductible.

Mark Chapman, director of tax communications for H&R Block Australia, explains how to claim Covid expenses such as RATs, as a tax deduction.

Rapid Antigen Tests (RATs)

The government announced that it is making Covid-19 tests tax-deductible for Australian individuals when they are purchased for work-related purposes. This legislation will be backdated to apply for the 2021-22 income year (from 1 July 2021).

But did you know they are probably already deductible?

Under the existing general deduction provisions, an individual may qualify for a tax deduction for the cost of a Covid-19 test (either PCR or RAT) where they are taken for work-related purposes, eg where there is a mandatory requirement under an employer’s Covid-19 mandate.

A Covid-19 test may also be required by certain countries and states in order for an employee to enter that territory or return to their home state. This too is tax deductible where the test is required for a work-related trip. 

RAT kits purchased by individuals for private purposes (eg personal travel, convenience, no access to PCR testing) will not be tax deductible, either under existing law or under the government’s proposals.

Remember to keep all receipts relating to Covid-19 testing and take them with you when you get your tax return prepared, together with substantiation that shows the test was for work-related purposes.

If you incur transport expenses to get to and from the site of a Covid-19 PCR test (or expenses in traveling to the chemist or supermarket to acquire an RAT), these will not be tax deductible as they are regarded as private expenses, even if the test is a condition of your employment.

Want to read more? Check out the full article in our winter digital magazine, which is out now!