Claim Covid Tax Deductions in 2022 & 2023

With the end of the financial year looming, maximising your deductions is a clever (and legal) way to minimise the amount of tax you have to pay.

Many people are unaware that pandemic related items such as Covid tests, personal protective equipment and working from home expenses can be legitimate deductions.

Personal protective equipment (PPE)

You may be able to claim a deduction for PPE you buy and use at work if you need to use it in direct connection to earning your employment income.

Relevant circumstances include that you are exposed to the risk of illness or injury in the course of carrying out your work duties and the risk is not negligible or remote.

If your employer requires you to wear a face mask or face shield at your place of work, and they are not provided by your employer, then you can claim the cost as a deduction. The deduction is triggered if you need to work closely with other people such as colleagues, clients or customers.

Other PPE items such as sanitiser, anti-bacterial spray and gloves are also deductible if your work entails close contact with customers, clients, or cleaning of the premises.

People who work in cafes and restaurants, hospitality, medical, cleaning, retail, airlines, beauty and hairdressing are good examples of eligible industries.

It’s important to keep records and receipts of any purchases you make to back up your claims, and your employer cannot have reimbursed you for the expenditure.

Covid tests

For the 2022 financial year, the Australian Tax Office has advised Rapid Antigen Tests (RAT) and PCR tests are eligible tax deductions.

However, the cost must be attributable to your employment, so if you buy multiple RATs and use some for personal purposes such as visiting an elderly relative in an aged care facility, then you can’t claim that portion of the cost.

Employees, contractors and sole traders can claim out of pocket RATs and PCR tests under ‘Other work-related expenses’ on their individual tax return. Just be sure to include in the description ‘COVID-19 tests’.

Working from home

The Australian Tax Office instigated a temporary COVID-19 deduction shortcut in 2020 which is ending on 30 June 2022. The shortcut allows for a flat rate of 80 cents for every hour worked from home to compensate for additional costs such as electricity, gas, internet and a decline in value of equipment and furniture.

To continue to claim deductions for working from home expenses after 30 June 2022 you need to use either the fixed rate method or the actual cost method

To claim a working from home expense, you must:

  • Have worked from home and incurred additional running expenses 
  • Kept a record of the number of hours you worked from home, such as a diary, roster or timesheet
  • Have receipts for depreciating assets or equipment you use
  • Have spent the money yourself and not been reimbursed

 

Written by Jenny Westdorp

 

The information in this article has been prepared for general information purposes only and not as specific advice to any particular person. Any advice contained in the document is general advice and does not take into account any person's particular investment objectives, financial situation or needs. Before acting on anything based on this advice you should consider its appropriateness to you, having regard to your objectives, financial situations and needs.

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