ATO: Covid testing is tax deductible for business travellers

Covid-19 tests – especially 'gold standard' PCR testing – are significantly adding to the cost of post-pandemic travel, to the tune of $300-$450 per passenger in some instances.

But if you're setting out on a business trip those costs are a legitimate tax deduction, according to the Australian Taxation Office.

After Executive Traveller approached the ATO seeking formal advice on tax deductibility of Covid travel tests, an ATO spokesperson confirmed this is indeed the case.

"The cost of a PCR test can be claimed as a deduction by a taxpayer when they are travelling overseas on work and that test is required for that trip," the spokesperson said.

"The cost of the PCR test is considered to be an incidental expense as the travel is undertaken in the course of a taxpayer's employment."

More on this from the ATO:

"Travel expenses include incidental expenses which are minor but necessary expenses associated with a taxpayer's work-related travel. A taxpayer can claim travel expenses if they incur them when travelling away from their home overnight in the course of performing their employment duties."

"A PCR test may be required by the destination jurisdiction in order for them to enter the overseas country or when returning to Australia from the overseas country."

Mixing business and pleasure?

If you're among the many who combine business and leisure trips – which will become even more popular as a way to maximise the necessary outlay of those Covid tests – then you're still covered, according to the ATO.

"If a taxpayer's travel is for work and private purposes they will need to apportion their expenses" in the same way as they might also do with hotel stays, for example.

PCR testing prior to departing Australia averages $150, although some clinics – notably the Histopath pop-up clinics at Sydney, Melbourne and Brisbane international airport terminals – charge as little as $79 with results in 90 minutes (as long as you don't mind spending 90 minutes sitting around the airport).

Some countries – among them Singapore and Thailand – also require a Covid PCR test on arrival, while all travellers headed to Australia, including citizens coming back from an overseas trip, must take a PCR test within 72 hours of the departure of their return flight.

The cost of that pre-return PCR tests varies not only from country to country, but in some cases depends on how quickly you need the results.

For example, test centres at San Francisco airport can charge USD$90 for a 24-hour turnaround to $250 for a result in 90 minutes.

In London you could be looking at £65-85, and upwards of SGD$120 in Singapore.

Read more: Covid tests are a hidden cost of post-pandemic travel