RAT Tests are now tax deductible

On 7 February 2022 the government announced that Covid-19 testing expenses are now tax deductible for any tests that are taken to be able to attend a work place.

If you are an employer who supplies these tests to your employees you will not incur fringe benefit tax on the covid-19 tests.

The ATO website states that this is not law as yet. However, please ensure you keep all receipts for RAT Tests that you have purchased during the year.

Quarantine Expenses can be tax deductible

If you are travelling for work during Covid-19 and must quarantine, you can claim your expenses for the following: accommodation, food, drink & incidental expenses. Expenses on RAT Tests can also be claimed for overnight work travel.

The above travel expenses are only deductible if you need to travel to perform your employment duties and must sleep away from your home overnight.

If you must quarantine either during or after travelling for work and you are required to pay for your own expenses, these are considered an extension of your work related trip and, therefore, undertake the quarantine as part of your employment duties.

You also can’t claim a deduction for quarantine expenses you incur when you either:

  • travel to or from a work location and need to quarantine
  • need to quarantine for another purpose (for example, returning from a private
    holiday), even if you can work from the quarantine location.

The fact you were working or are able to work from a quarantine location, does not meet the definition of ‘travelling on work’.

Example 1

Fay was travelling on work for a sales tour of Victoria for 3 weeks. On her return to Sydney, Fay must quarantine for two weeks in a hotel.

As Fay is only travelling for work duties, she can claim a deduction for costs she incurs while in quarantine for her:

  • accommodation
  • food and drinks
  • incidental expenses

Example 2

Rojesh lives and works in Brisbane, he travels to Sydney for a holiday for two weeks. Sydney was designated a Covid-19 hotspot during his trip. As such, when he returns to Brisbane, he must quarantine for two weeks in a hotel and can’t return to work. He pays for his accommodation, food and drink expenses during this two-week period.

While Rojesh is in quarantine he is able to work using his laptop and keep normal business hours. Even though he is working while in quarantine, Rojesh can’t claim a deduction for his accommodation, food and drink expenses.

His expenses are private in nature as his travel was not for work purposes.

Example: 3

Phillip takes a year of his long service leave so that he can live and work in the UK for that period. When his leave comes to an end, he returns to Adelaide.

When he arrives in Adelaide, he must quarantine for a two-week period in a hotel. While he is in quarantine, Phillip works for his Australian employer using his laptop.

As Phillip is returning to live in Australia, the expenses he incurs while in quarantine are not as a result of ‘travelling on work’. Therefore, his quarantine expenses are private in nature and he can’t claim a deduction.



Natasa Briffa