The Government has extended COVID support by treating the cost of rapid antigen tests required for work as tax deductible and exempt from Fringe Benefits Tax (“FBT”). The Government has also again allowed for various additional State support grants to be exempt from income tax.
Deductibility of rapid antigen tests and COVID testing
As expected, the Budget confirmed a February 2022 Government announcement that the costs of taking a rapid antigen test (or other COVID testing) to attend a place of work would be deductible from 1 July 2021. The measure will provide some tax relief to employees required to show a negative rapid antigen test result to attend their workplace, where such costs are paid out-of-pocket.
Where employees are reimbursed for the cost by their employer or where the employer provided the tests, the measure will ensure that employers will not incur a fringe benefits tax associated with providing tests to employees under the otherwise deductible rule.
The measure is set to apply retrospectively from 1 July 2021.
Income tax exemption of State COVID-19 support grants
The Government announced on 13 September 2020 that certain State and Territory COVID-19 support grants to small businesses (with aggregated turnover up to $50 million) would be treated as non-assessable non-exempt for income tax purposes.
The Budget extends the income tax exemption for an additional eight grants and support packages introduced in the 30 June 2022 year by the New South Wales, Queensland and South Australian governments.