Two things businesses need to know now that RATs are exempt from FBT

Australians can claim rapid antigen tests (RATs) when they do their tax, and businesses will be exempt from employee benefits tax (FBT) as COVID-19 testing emerges as a key battleground ahead of the federal elections.

Treasurer Josh Frydenberg will announce the change at the Australian Industry Group today, explaining that the company’s FBT liability would be reduced by $20 for a double pack of RATs, while someone over 45 $000 would get about $6.50 back in tax for two-pack of RATs worth about $20.

“By making sensible decisions like this, we make life easier for households and businesses,” says Frydenberg.

Additionally, the legislation will be backdated to July 1, 2021, points out Elinor Kasapidis, head of tax policy at CPA Australia, meaning that if you have already purchased RATs for work-related reasons, “you may be eligible for tax relief. ” , she says.

But Kasapidis warns that there will be at least two important caveats businesses will need to consider before taking advantage of the new tax change.

“The RATs must have been purchased for professional use; it doesn’t appear that private use is covered,” she says.

You also need to have evidence to back up your claim, she continues, which means RATs you’ve purchased before may not be deductible unless you keep your receipt or receipts.

“It can leave a sour taste in the mouths of businesses and individuals who have previously purchased RATs for business purposes and failed to keep records,” she says.

“Given that we are already eight months into the tax year, this highlights the need for faster decision-making by the government.”

Greg Wilkins, client director at Pitcher Partners Sydney, says he hopes the tax changes will also apply to a wide range of businesses, especially as smaller businesses have been vulnerable to weak consumer confidence.

“Employees who avoided testing due to the cost will now feel relieved as testing costs will effectively be reduced and their health better protected,” he says.

“In particular, the removal of compliance time and costs for small employers who have not previously provided taxable employee benefits will mean that these business operators can once again focus their attention on running their businesses in these tough times and focus on what they do best – their day-to-day operations.”

The benefits of the tax change will depend on words matching legislative outcomes, said the Public Affairs Institute’s chief technical policy officer, Tony Greco, so consumers and businesses can focus on the task at hand: get hold of the elusive RATs.

Open market shortages have caused problems for businesses and consumers for much of this year, with some accusing the federal government of not being prepared for Omicron last year, despite warnings received in advance. .

“We have not yet received the detailed wording of the legislative changes, but if his comments are followed, it will remove some of the anxiety and the need for employers to seek professional advice to determine whether any of the exemptions Existing FBTs could apply,” he said. said.

But, he warns, “existing FBT rules are outdated and cannot address these new emerging issues – underpinning a larger systemic problem.”

It comes as Opposition Leader Anthony Albanese confirmed that under a Labor government RATs would be free, although he backtracked on the policy by clarifying that a ‘limited’ number would be available through Medicare.

Frydenberg again smeared the idea, saying Labor “is committed to providing free RATs on an ongoing basis, at an estimated ongoing cost of $13 billion a year, which is simply unsustainable.”

But Albanese has previously said the idea is “not a radical proposal”.

“They should be available through the Medicare schedule, you would have a limit, because there is, the government has put a limit on concession card holders,” Albanese explained on the ABC.

“That’s how you can control the supply, it’s not rocket science here, that’s the advantage of having the Australian Medicare system.”

Meanwhile in the United States, the Biden administration has confirmed that one billion free tests will be sent to every citizen, and that 60 million households are expected to receive their tests shortly.