Date posted: 05/04/2022

Submission on draft statement – deductibility of costs incurred due to COVID-19

CA ANZ recently provided feedback on Inland Revenue’s draft interpretation statement - deductibility of costs incurred due to COVID-19

In brief

  • Discussion on the deductibility of costs incurred to ensure adequate social distancing could be clarified
  • One of the examples should be enhanced to take into account FBT

This statement considers whether a business may claim an income tax deduction for costs it incurs due to the COVID-19 pandemic. The Commissioner is aware that there has been some uncertainty about whether COVID-19-related costs incurred by businesses are deductible.

In CA ANZ’s view:

  • It is helpful that a distinction has been made between this draft statement and Interpretation Statement IS 21/04, "Income tax and GST - deductions for businesses disrupted by the COVID-19 pandemic".
  • CA ANZ supports the principles approach adopted in the draft statement.

CA ANZ recommended:

  • The discussion regarding the deductibility of costs incurred to ensure adequate social distancing be clarified.
  • One of the examples be enhanced to take into account possible exclusions from the FBT rules

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