The Australian Taxation Office (ATO) anticipates that COVID-19 will continue to impact the income and deductions taxpayers will be reporting this tax time.
This tax time taxpayers need to be aware of changes in circumstances that may affect what needs to be included as income or what can be claimed as a deduction. Among the most common changes for taxpayers include receiving an income support payment and changing what can be claimed as a work-related expense.
In the 2022 Fin.Year, taxpayers who paid for a COVID-19 test for work-related purposes can now claim a deduction for the test.
Taxpayers must have a record to demonstrate that they paid for the test, a receipt or invoice is usually best. If those documents aren’t available, a bank or credit card statement or evidence from an employer can be provided. Taxpayers cannot claim for a test that their employer provided or if their employer reimbursed them for the cost. Only tests that are required for work-related purposes can be claimed.
Taxpayers may be able to claim a deduction for the cost of protective items that protect against risk of illness or injury while performing work duties.
Tax treatment of different payments
JOB SEEKER
JobSeeker payments are taxable. This information will be automatically pre-filled in tax returns at the Government Allowances and Payments label once it’s ready.
COVID-19 disaster payment for people affected by restrictions
The Australian Government’s COVID-19 disaster payment (delivered through Services Australia) is not taxable. It does not need to be included in tax returns.
Pandemic Leave Disaster Payments
The Pandemic Leave Disaster Payment is taxable. This payment needs to be included in tax returns for the income year the amounts were received. Services Australia provided recipients with a letter each time they received a payment.
Those who received the Pandemic Leave Disaster Payment will need to manually add up all the amounts received and include the total amount received in their tax return. This payment won’t be prefilled into the return.
The tax treatment of assistance payments can vary. The ATO website has a quick guide to the tax treatment of the various COVID-19 payments.