Can I claim COVID-19 tests on tax?

Did you know that you can claim COVID-19 tests on your tax?

As of July 2021, if you are an employee, sole-trader or contractor and you pay for a COVID-19 test for a work-related purpose, you can claim a deduction for its cost. This change took affect from the beginning of the 2021‑22 tax year and will remain in place permanently.

When can I claim COVID-19 testing?

From 1 July 2021, to claim a deduction for the cost of a COVID-19 test, you must:

• use the test for a work-related purpose to determine if you can attend or remain at work

• pay for a qualifying COVID-19 test, being a:

  • polymerase chain reaction (PCR) test through a private clinic, or

  • test listed in the Australian Register of Therapeutic Goods, including rapid antigen test (RAT) kits

• pay for the test yourself (that is, your employer doesn't give you a test or reimburse you for the cost)

• kept a record to prove that you incurred the cost (usually a receipt).

You can only claim a deduction for the COVID-19 tests you paid for that were used by you to determine whether you may attend or remain at work. For example, if you buy a multipack of COVID-19 tests and some of these tests were used for private purposes (such as by other family or household members or for leisure activities), you must only claim a deduction for the portion of the expense you used for a work-related purpose.

The ATO will accept claims for the deduction for the COVID-19 tests in the income year you paid for the tests if the purpose of buying the tests was solely for a work-related purpose and this intention has not changed for any unused tests remaining at the end of an income year. This is to make it easier for you to comply with your tax obligations.

When can I not claim COVID-19 testing?

You can't claim the cost of a COVID-19 test where any of the following apply:

• you use the test for private purposes – for example, to test your children before they attend school or day care

• you receive a reimbursement for the expense from your employer or another person

• you received a free COVID-19 test

• you work from home and don't attend another place to either gain or produce your assessable income, or to carry on a business for that purpose.

You also can’t claim a deduction for the travel or parking expenses you incur to buy your COVID-19 test. It does not form part of the cost of the test and is private in nature.

Don’t forget: Keep records for COVID-19 tests

You need to keep records of COVID-19 tests to demonstrate that you paid for the test and the test was for work-related purposes. This may include a receipt or invoice, and evidence such as:

• correspondence from your employer stipulating the requirement to test

• your employer's COVID-19 safety plans and policies

• relevant state health advice or requirements

• diary notes made by you that you used a test to determine whether you could attend or remain at work.

If you don't have a record of your expenses before the law changed on 31 March 2022, we will accept reasonable evidence of your expenses. This may include:

• bank and credit card statements

• a diary or other documents, including receipts, that shows a pattern of buying COVID-19 tests after the law change that could reasonably have applied from 1 July 2021.

Completing your tax return

Once you calculate your deduction, if you're an employee enter the amount at Other work-related expenses in your tax return. Include in the description 'COVID-19 tests'.

If you are a sole-trader or contractor, enter the amount at All other expenses in your Business and professional items schedule.

Article originally published on Australian Taxation Office