Sunday Dec 04, 2022

Australia COVID: COVID-19 to boost tax returns – The Australian Financial Review


“Tax time can be a smooth and easy experience if you know what income you must include and what COVID-19-related expenses you can claim in your tax return.”

Although COVID-19 tests are free for people who have symptoms, if taxpayers are required to pay for a work-related test they can claim the cost among their deductions.

To claim the cost of a test, taxpayers must have a record to demonstrate that they paid for purchase, such as a receipt or invoice. Where a receipt or invoice is not available, the ATO will accept reasonable evidence, such as a bank or credit card statement or evidence from an employer.

Tests provided by employers, or tests for which the worker has already been reimbursed, cannot be claimed.

Deductions for gloves, face masks

Mr Loh said only tests required for work-related purposes could be claimed on tax returns, but taxpayers might also be able to claim a deduction for the cost of items that protect against risk of illness or injury while performing work duties.

“If you’re spending your working day in close proximity to customers and at risk of contracting COVID-19, you may be able to claim a deduction for protective items such as gloves, face masks or sanitiser. This will be most common in industries such as retail, cleaning and hospitality.”

The number of people claiming work-related deductions grew from 3.14 million in 2018-19 to more than 4.39 million as the pandemic hit.

About one in three used the ATO’s extended COVID-19 shortcut method for claiming working from home costs last year.

The 80¢-per-hour method is all-inclusive, covering all working-from-home running costs including cleaning, cooling, heating and lighting costs, depreciation of home office equipment, depreciation of technological and telephone and internet costs.

The traditional method of claiming specific deductions is still available, but requires receipts, paperwork and other records. The shortcut method requires only a record of hours worked such as diary entries or timesheets.

The shortcut method is due to end in 2022.

JobSeeker payments are taxable and the required information will be automatically pre-filled in tax returns, under the “government allowances and payments” label.

Taxpayers are not required to include COVID-19 disaster payments related to lockdowns and health restrictions, but the Pandemic Leave Disaster Payment is taxable.

The ATO said the payment needed to be included in tax returns for the income year in which the amounts were received.

“While the information isn’t pre-filled for you, not adding Pandemic Leave Disaster Payments to your tax return will delay the processing of your return and your potential refund,” Mr Loh said.

The March federal budget included about $5.6 billion in temporary cash measures targeted at hip pockets, including the $420 tax offset going to about 10 million taxpayers.


Leave a Reply

Your email address will not be published.

Back to Top