Why are ASX COVID test shares climbing today?

COVID-19 tests are in focus again today.

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A man wearing a mask punches the air with joy after getting a negative COVID result on a rapid antigen test.

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Key points

  • COVID-19 tests are in focus in Australia today
  • Treasurer Josh Frydenberg announces the government will make them tax deductible
  • ASX COVID-19 test shares enjoy time in the green on Monday

ASX COVID-19 test shares are in the green today amid a federal government announcement. This morning Treasurer Josh Frydenberg outlined the government’s plan to make the tests tax deductible.

ASX-listed companies that manufacture COVID-19 tests include Atomo Diagnostics Ltd (ASX: AT1), Lumos Diagnostics Holdings Ltd (ASX: LDX) and AnteoTech Ltd (ASX: ADO.

Atomo’s share price is currently climbing 1.19% today, while Lumos is in the green 2.49 and Anteotech is jumping 6.98%.

Let’s take a look at the news that could be giving these shares a bump today.

Tax deductible COVID-19 tests

COVID-19 tests for people who need them for work will be tax deductible from this year, the Financial Review reported.

Sonic Healthcare Limited (ASX: SHL) and Healius Ltd (ASX: HLS) process COVID-19 tests in Australia. Sonic has conducted millions of PCR tests, while Healius is processing 40,000 COVID-19 tests every day.

Treasurer Frydenberg will discuss the tax deduction policy in a speech to the Australian Industry Group today. In a copy of the speech, reported by the SBS, he states:

Today, I’m announcing that we will ensure that COVID-19 testing expenses are tax deductible for testing taken to attend a place of work, giving businesses and individuals more clarity and assurance.

We will also ensure that fringe benefits tax will not be incurred by employers where COVID-19 tests are provided to employees for this purpose.

The Lumos share price surged 5% last week on news the Victorian Government intends to support local manufacturing of its RAT tests.

Atomo secured up to 20 million COVID-19 rapid antigen tests for Australia and New Zealand in 2022, my Foolish colleague Aaron reported in January.

Anteotech is still awaiting Therapeutic Goods Administration (TGA) approval for use of its COVID-19 rapid antigen test in Australia.

Ellume is another Australian company working on TGA approval to sell its RATs in Australia. However, it is not listed on the ASX.

Share price recap

Some COVID-19 test shares have benefitted from the pandemic, making major gains in the past 52 weeks.

In the past year, Anteotech has rocketed 27%, while Sonic has surged 9% and Healius has gained 8%.

However, that’s not true across the board. The Atomo share price has slumped 27% while the Lumos share price is down 17%.

In contrast, the S&P/ASX 200 Index (ASX: XJO) has returned more than 3.4% in the past year.

The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has recommended Sonic Healthcare Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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