COVID-19 tests and fringe benefits tax
- From 1 July 2021, if you provided (or reimbursed the cost of) COVID-19 tests to your employees for work purposes from this date, you may be able to reduce the taxable value by applying the otherwise deductible rule.
- If COVID-19 tests are the only fringe benefit you provided to your employees, and you have reduced the taxable value to nil, you will not have an FBT liability and will not be required to lodge an FBT return.
Don’t forget, the existing FBT record keeping requirements apply. You will need to keep all records relating to how you calculated the taxable value of benefits, including the necessary declarations. For more information, visit FBT, COVID-19 tests and the otherwise deductible rule.
Claiming COVID-19 tests
From 1 July 2021, employees can claim a tax deduction for COVID-19 tests they purchased for work purposes.
To claim a deduction for the cost they incurred for a COVID-19 test, they must have:
- used the test for a work-related purpose
- paid for a qualifying COVID-19 test, such as a PCR or RAT
- paid for the test themselves (that is, their employer didn’t provide the test or reimburse them for the cost)
- kept a record to prove they incurred the cost (usually a receipt) and were required to take the test for work purposes.
Employees can only claim the work-related portion of their expense on COVID-19 tests.