COVID-related tax deductions you need to know

Most people know that the costs of working from home during the COVID-19 pandemic are a legitimate tax deduction on your annual return.

However, there are also other coronavirus-related inferences.

You need evidence to show how much of your COVID-19 expenses are work-related. Credit:Justin McManus

One you may not know, but could claim, is the cost of work-related COVID-19 testing.

Legislation making the costs tax-deductible came into force in March and has been backdated to cover the 2021-22 financial year.

With rapid antigen tests typically costing $10 or more each, these costs can quickly add up. PCR test costs can also be claimed.

Tuesday Heinrich, tax partner at KPMG Australia, says the tests must have been taken to determine whether you can go to work or stay there, and you need notification as such from your employer. They must also have been paid out of pocket and not reimbursed by your employer.

Heinrich says you can only claim the work-related portion of your COVID-19 testing expenses. For example, if you purchased a multipack of tests and used it for private purposes – for other family members or for leisure activities – you can only claim the cost of the work-related part .

The Australian Taxation Office (ATO) says you must keep good records of all work-related COVID-19 tests claimed, to demonstrate that you paid for them and that they were necessary for you to work.

These may include bank or credit card statements, or a journal or other documents, including receipts, that show a pattern of purchasing tests after the law changed, or that “could reasonably have apply from 1 July 2021”.