Source: The Hon Michael Sukkar MP
The Morrison Government is taking action to ensure that COVID‑19 tests (including Polymerase Chain Reaction and Rapid Antigen Tests) are tax-deductible for hard‑working Australians and exempt from fringe benefit tax for businesses, where they are purchased for work‑related purposes.
To remove any doubt, the Government will introduce legislation to make clear that work‑related COVID‑19 test expenses incurred by individuals will be tax deductible. This applies both when an individual is required to attend the workplace or has the option to work remotely.
By introducing this legislation, the Government will also ensure that fringe benefit tax will not be incurred by employers if they provide COVID‑19 testing to their employees for work‑related purposes.
This change will take effect from the beginning of the 2021‑22 tax year and will be in place permanently.
This action recognises that COVID‑19 tests are an important tool for mitigating transmission risks and absences from the workplace.
The Morrison Government has acted swiftly throughout the pandemic to provide Australians and small businesses with clarity and certainty, and continues to do so as they transition back to their workplaces.
The move on RATs has been welcomed by CPA Australia, which called for it in its budget submission.
“We welcome the decision to make RATs tax-deductible and FBT exempt. This will help business and employees manage the workplace costs of COVID-19 compliance,” said Elinor Kasapidis, senior manager tax policy at CPA Australia.
“This is good news, and we expect practitioners will want to let their clients know about the changes.”
While CPA Australia backs the decision on RATs, Ms Kasapidis noted that “there are a few traps for the unwary which we’d encourage practitioners to warn clients about at the same time”.
Tony Greco, general manager of technical policy at the Institute of Public Accountants (IPA) also welcomed the government’s move to make COVID-19 tests tax-deductible and FBT exempt, noting that it removes the “uncertainty” being felt by practitioners and their clients.
“We have yet to receive detailed wording of the legislative changes but if his comments are followed through it will remove some of the angst and need for employers to seek professional advice to ascertain whether any of the existing FBT exemptions could apply. The existing FBT rules are antiquated and cannot deal with these new emerging issues and underlies a bigger systemic problem with the FBT regime which is another story for another day,” Mr Greco said.
“It is also good news for employees if they can deduct the cost of procuring RATS for work purposes as this was problematic under existing tax rules.
“What we need to see now is the details to ensure the words match the legislative outcome so that we can get on to more important matters and remove all the uncertainties associated with the cost of procuring RAT’s for both employers and employees.”