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Covid-19 tax: What you need to know about claiming deductions

Duncan MurrayNCA NewsWire
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Australians are being told to look extra carefully at their tax this year and consider how Covid has impacted their deductions and declarations.

The biggest difference this year would be understanding what can be claimed as a work-related expense and correctly declaring Covid support payments, the Australian Taxation Office (ATO) said.

For the first time, taxpayers who bought a Covid test for work-related purposes after July 1, 2021, will be able to claim the test as a deduction.

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Camera IconWorkers who purchased Covid tests, face masks and other PPE for work-related purposes may be able to claim the cost as a tax deduction. NCA NewsWire / David Geraghty. Credit: News Corp Australia

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Work-related reasons include doing a test to determine if you can attend work or not. Only tests that were work-related and were paid for by the employees and not reimbursed can be claimed.

“If you purchased a Covid-19 test for a trip with your mates, you can’t claim a deduction,” ATO assistant commissioner Tim Loh said.

Deductions are also available for items that protect against catching or spreading Covid at work – if there was significant risk to you or others.

Face masks may be claimed if you were required to go to your place of work or come into contact with other people.

For other protective items such as gloves, sanitiser or antibacterial spray, they can only be claimed if you were working closely with clients or customers or cleaning a premises.

“This will be most common in industries such as retail, cleaning and hospitality,” Mr Loh explained.

As always proof of the purchase is required to claim a deduction – preferably a receipt or invoice – although the ATO accepts “reasonable evidence” such as a bank or credit card statement or evidence from an employer.

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Camera IconAussies who received Covid support payments may need to declare them for tax purposes. NCA NewsWire / James Gourley Credit: News Corp Australia

Those who received various types of financial assistance throughout the pandemic also need to be aware what is taxable and what’s not.

JobSeeker payments are taxable and will be automatically added to the forms of those who received it; however, forms may also be lodged before the information is added, in which case it must be added manually.

The lump sum commonwealth Covid-19 disaster payment made to help some workers unable to earn income during Covid lockdowns is not taxable and does not need to be included in tax returns.

The pandemic leave disaster payment is taxable and needs to be added manually for all payments made within the financial year.

“While the information isn’t prefilled 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.

Taxpayers who used a third party to complete their tax should let them know they received the pandemic leave disaster payment, the ATO said.

Originally published as Covid-19 tax: What you need to know about claiming deductions

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