The RAT tax could attract FBT for business owners

With the current variant of COVID-19, this has caused many businesses to spend the first few weeks of 2022 adjusting to the new norm with masks for all employees and making sure they are safeguarding the employee’s health whilst they transition back into the workplace.

Many business owners are trying to cope with staff off sick and in addition to digital vaccine certificates and high vaccination rates, the access to Rapid Antigen Tests (RATs) has been beneficial to businesses to help monitor and reduce the spread of the virus in their workplaces.

Despite the benefits of the free RATs to employees, employers / business owners need to be aware of the ramifications on their Fringe Benefits Tax obligations.

That’s right…handing out the Rapid Antigen Tests to employees/staff is a great way to keep your workplace safe, but……can also trigger tax ramifications that all employers/business owners need to be aware of.

The ATO’s view on COVID-19 testing and FBT is throughout the pandemic, the ATO realized ongoing guidance about how FBT impacts COVID-19 related expenses.

This information has been extracted from trong>
‘When it comes to offering COVID-19 testing options to employees for free, the ATO allows for an exemption from FBT if the both of the following two conditions are met:
1. The tests are administered by a medical or health care practitioner, and
2. The tests are offered to all employees equally.

The ATO also flags the ‘minor benefits exemption’, which removes any FBT obligations on benefits that are provided irregularly and whose cumulative value over the course of the FBT year is less than $300

RATs are tax deductible for employers and employees alike

While at this stage RATs are non-exempt from FBT, Accountants Daily highlights that, if an employer purchases them for their employees for work related matters, they can be considered business expenses and are therefore tax deductible.

So even if the ultimate position of the ATO is that RATs are to remain non-exempt from FBT, their tax deductibility should certainly be considered when the company prepares its income tax return at the end of its financial year.

Additionally, if an employee purchases as RAT for the purpose of attending the workplace or travelling for work, if the employer does not cover these costs, the testing kit would be a deductable expense for the employee themselves.

FBT and income tax calculations can be very complex, and as seen in the case of RATs, the rules and exemptions can be very nuanced, so always consider consulting a professional before making any tax-related decisions’

If this sounds all too confusing, then give me a call on 0429 363 047, I can take care of this for you and so much more.

Maree Punzet | Maree’s Mobile Bookkeeping | 0429 363 047
You didn’t go into business to do your Payroll and Bookkeeping, BUT WE DID