How HR leaders can help inform and guide employees
Treasurer Josh Frydenberg has announced that COVID-19 tests will be tax-deductible in a bid to provide clarity on the tax treatment on Rapid Antigen Tests (RATs).
"Today, I'm announcing that we will ensure that COVID‑19 testing expenses are tax-deductible for testing taken to attend a place of work, giving businesses and individuals more clarity and assurance," Frydenberg said in a speech to the Australian Industry Group.
"We will also ensure that fringe benefits tax will not be incurred by employers where COVID‑19 tests are provided to employees for this purpose."
This means that for individuals, for every COVID-19 test that they pay for the purpose of work, a portion of the cost will be returned at tax time. For small businesses, this means the total cost of the test is exempt from the fringe benefits tax. ABC News reported that tests bought in the 2021/2022 financial year can be claimed.
The announcement comes as the government seeks to resolve workplace shortages. It was an issue already prompted by closed international borders that was even furthered because of the outbreak of the Omicron variant in Australia.
"We know that for small businesses, having one or two key workers absent can have a major impact. That is why the Government has acted quickly," Frydenberg said in his speech.
The government has so far changed close contact and isolation requirements so essential workers can keep working, according to the treasurer, while the government has been "working hard" to make RATs available to workers and businesses over the coming weeks.
"Since the start of 2022, the Government has secured more than 80 million Rapid Antigen Tests for delivery in January and February for use in Aged Care and other high‑risk settings," the treasurer said.
Read more: Australia brings back tighter curbs amid Omicron threat
However, it comes a lot of criticism towards the government over its delay in providing RATs to workplaces.
The Australian Council of Trade Unions (ACTU) on Monday said making some RATs tax deductible is "not a viable alternative to making them free and accessible for all."
"Prime Minister Scott Morrison must make Rapid Antigen Tests free and accessible for all, and he must do it now," said ACTU secretary Sally McManus.
"It is wrong for the prime minister to suggest workers who are required to test for work must pay for this themselves. He must clarify that this cost must be borne by employers, or better still, announce free tests for all," added the official.
While HR leaders are not responsible for employee’s individual tax returns, they can provide vital guidance. The tests in questions are being carried out so workers are able to do their job, so the following questions from staff are likely. Be prepared with the answers.
The announcement covers both Australian individuals and small businesses, and the amount an individual will get back is calculated by their tax rate.
Only the COVID-19 tests you purchase for work-related purposes are tax deductible. Any that have been used to test other household members such as your children are not eligible.
Any test that has been bought in the 2021/2022 financial year can be claimed. The legislation will be in effect from the 2021-22 FBT and income years and will be backdated to July 1, 2021.
Workers will need to follow the same steps as any other work-related expense. You'll need to keep some form of record to prove that you spent money on it. If you don’t have a receipt, you can use a detailed record of the purchase in another form, such as a written diary entry. Records need to show what you purchased, when, where, and how much you spent, and must be in English.
