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Are you claiming all the COVID-19 tax deductions you’re entitled to?

By H&R Block 4 min read

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

COVID-19 Testing

The government recently announced that from 1 July 2021 COVID-19 tests will be tax-deductible for Australian individuals when they are purchased for work-related purposes. But did you know they were probably already deductible?

Under the 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 bring them with you to your tax return appointment, together with substantiation that shows the test was for work-related purposes.

Quarantine Expenses

If you must quarantine either during or after a trip while travelling on work, any costs paid by you that relate to the quarantine (eg hotel fees, meals) would be tax deductible as the quarantine is undertaken as part of your employment duties.

If not travelling on work, quarantine expenses are private in nature and not deductible.

A deduction for quarantine expenses also cannot be claimed in the following circumstances:

  • fly-in, fly-out employees who travel to a regular work site but are not under the supervision and control of their employers whilst in transit
  • where the need to quarantine is for a private purpose (for example, returning from a private holiday).

COVID-19 Vaccine Payments and Incentives

If you’ve received a payment or reward from your employer to get the COVID-19 vaccination, there may be tax consequences.

If you have received a cash payment, it should be included in your salary and wages and will be taxable.

If you’ve received paid leave to get the vaccination, payments that you receive while on leave are counted as assessable income (they are treated like any other paid leave).

If you receive a non-cash benefit (eg a voucher or gift card), this is not taxable to your personally. However, there may be Fringe Benefits Tax (FBT) payable by your employer.

Expenses

If you incur transport expenses to get to and from the COVID-19 vaccination location, these will not be tax deductible as they are regarded as private expenses, even if the vaccination is a condition of your employment.
 

Spend Tracking

Don't miss out on any eligible tax deductions. Keep track of your expenses with our MoneyHub Spend Tracker

It's a free tool within our MoneyHub platform that allows you to link all your bank account and credit card transactions into one easy to manage dashboard.

From there, simply tag all your tax deductible transactions and export the full list at the end of the financial year to give to your tax agent.

It's fast, it's free and it will help you maximise your tax return!

Check it out here.

Book an online appointment today

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