The ATO has released further clarity on how COVID related expenses including the cost of tests will be treated at tax time and emphasised their firm stance on what will be tax deductible.

The ATO states that disaster payments are tax-exempt and do not have to be included on in the tax return. However, “leave disaster payments” – granted for those isolating or caring for someone with COVID – count as income and do need to be included.

Deductions for COVID tests must be for “a work-related purpose, such as to determine whether you could attend or remain at work”. The relevant test must be on the Australian Register of Therapeutic Goods and a receipt is required.

Claims cannot be made if an employer supplied the test, you were working from home or it was for private purposes, such as testing children for school. Additionally, the ATO warned against claiming for the entire cost of a test multipack when only some were used for work, or trying to recover the costs of travelling to get a test.

For any assistance in understanding the implications of the above, or your tax liability, please contact your Hall Chadwick QLD advisor.