Covid-19 tax: what you need to know to claim deductions

Australians could be eligible for a range of deductions on this year’s tax return if Covid-19 impacts their business expenses.

Australians are being told to look very carefully at their tax this year and consider the impact of Covid on their deductions and returns.

The biggest difference this year would be understanding what can be claimed as a work-related expense and reporting Covid support payments correctly, the Australian Taxation Office (ATO) has said.

For the first time, taxpayers who purchased a Covid test for business purposes after July 1, 2021 will be able to claim the test as a deduction.

Work-related reasons include taking a test to determine whether or not you can report to work. Only work-related tests paid for by employees and not reimbursed can be claimed.

“If you bought a Covid-19 test for a trip with your friends, you cannot claim a deduction,” said ATO Deputy Commissioner Tim Loh.

Deductions are also available for items that protect against catching or spreading Covid at work – if there was a significant risk to you or others.

Face masks can be claimed if you had to go to your place of work or come into contact with other people.

For other protective items such as gloves, disinfectant or antibacterial spray, they can only be claimed if you were working closely with customers or cleaning a premises.

“It will be most common in industries such as retail, cleaning and hospitality,” Loh explained.

As always, proof of purchase is required to claim a deduction – preferably a receipt or invoice – although the ATO will accept “reasonable evidence” such as a bank or credit card statement or proof of An employer.

Those who have received various types of financial assistance throughout the pandemic also need to know what is taxable and what is not.

JobSeeker payments are taxable and will be automatically added to the forms of those who received them; however, forms can also be filed before the information is added, in which case it must be added manually.

The Commonwealth Covid-19 Disaster Lump Sum Payment made to help certain workers unable to earn an income during the Covid shutdowns is not taxable and does not need to be included on tax returns.

The pandemic leave payment is taxable and must be added manually for all payments made during the fiscal year.

“While the information is not pre-populated for you, not adding pandemic-related disaster payments to your tax return will delay the processing of your return and your potential refund,” Loh said. .

Taxpayers who used a third party to complete their tax return should let them know they received the pandemic disaster payment, the ATO said.