The Treasurer has announced that PCR and rapid antigen tests (RAT) will be tax deductible for individuals and exempt from fringe benefits tax (FBT) for employers if purchased for work purposes.
There has been confusion over the tax treatment of RATs with the Prime Minister stating for some time that they are tax deductible, but in reality, the tests were probably only deductible in limited circumstances.
If you have had to purchase Rapid Antigen tests to be able to work, you will be able to receive a tax deduction for the cost you have incurred from 1 July 2021 (you will need evidence of the expense). For example, if the RAT test cost $20, someone on a marginal tax rate of 32.5% would receive a tax benefit of $6.50.
For business, it is expected that Rapid Antigen, PCR and other coronavirus tests will be exempt from FBT from the 2021-22 FBT year.
The change will be confirmed through legislation in parliament, later this week.
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