There is a bit of confusion around whether RA Tests are tax deductible since Prime minister Scott Morrison said they were tax deductible.

The public accountant journal states that RA Tests for individuals are tax deductible in very limited circumstances unless there is a change in law.

Individuals

An individual taxpayer may qualify for a tax deduction for a RAT where they are required by their employer to take a test before undertaking work, for example where there is a mandatory requirement under an employer’s COVID-19 mandate.

However, the Australian Taxation Office (ATO) may take the view a RAT taken prior to commencing work is “not on work time” or “preliminary” to the workday and as a result, not tax-deductible.

Business

Where the employer incurs expenditure providing RATs to employees, the cost should be a tax-deductible business expense, as the expense will be necessarily incurred in carrying on the business

However, here the employer provides RATs at no cost to employees this may be the provision of a fringe benefit and as such, subject to fringe benefits tax (FBT)

FBT May be reduced if employers are eligible for exemptions.

To be eligible for the work-related medical screening FBT exemption, both of the following conditions must be satisfied:

• The test must be carried out by a legally qualified medical practitioner or nurse.
• The testing is available for all employees.

The minor benefit exemption only applies where the notional taxable value of the benefit is less than $300 (including GST) and the benefit is provided on a minor, infrequent and irregular basis, ruling our regular testing.

If you have any questions about RA Testing and tax deductibility or FBT, please contact sharon@sharbara.com.au.

REF: https://www.publicaccountant.com.au/news/rats-tax-implications-for-business