Private ruling: Zone Tax Offset
Published: November 2012
Ruling period: Year ended 30 June 2012
Date scheme commenced: 1 July 2011

Ruling: Q1: Does the Commissioner of Taxation have discretion to treat Town A as being within a zone area for the purposes of the zone tax offset? | A1: No


Relevant legislative provisions: Income Tax Assessment Act 1936 Section 79A

Reasons for decision: Summary: A zone tax offset is provided under subsection 79A(1) of the Income Tax Assessment Act 1936 (ITAA 1936) for individuals who are residents of certain areas which are subject to uncongenial climatic conditions, are isolated, or where the cost of living is high. These areas are comprised of two zones - Zone A and Zone B. Zone A comprises those areas where the above factors are more pronounced whilst Zone B comprises the less badly affected areas. For the purposes of the zone tax offset, Zone A and Zone B are defined at subsection 79A(4) of the ITAA 1936 to mean the area described in Part I and Part II of Schedule 2 of the ITAA 1936. The areas described in Schedule 2 of the ITAA 1936 refer to certain parts of the mainland of Australia and islands forming part of Australia. A location in Zone A or B that is particularly remote may be considered to lie in a special zone area. Special zone areas attract a higher rate of zone tax offset than the 'ordinary' area of Zone A or B. In your case, you lived and worked in Town A for a full financial year. We accept that Town A may be remote in respect of distance from the nearest urban centre. However, Town A is not an area described within Part I and Part II of Schedule 2 of the ITAA 1936, and therefore is not an area in Zone A or Zone B as defined at subsection 79A(4) of the ITAA 1936. The ITAA 1936 provides the Commissioner with some discretion to treat a point in close proximity to a special area of a zone as if it were within that special zone area for the purposes of zone tax offsets under section 79A of the ITAA 1936. Subsection 79A(3E) of the ITAA 1936 (which provides that discretion to the Commissioner) is applicable specifically only to points already within the ordinary area of either Zone A or Zone B and lying in close proximity to the special area of those zones. This discretion however, is not available to the Commissioner to bring a point lying outside of a zone into the ordinary area of either Zone A or Zone B. Consequently, you are not entitled to a zone tax offset.

Please check this edited version to be sure that there are no details remaining that you think may allow you to be identified. If you have any concerns about this ruling you wish to discuss, you will find our contact details in the fact sheet. | Town A does not appear in the ATO's Zone list for the purposes of the zone tax offset. | Town A has a population of approximately several thousand people and is approximately x kilometres from Town B, which is in Zone B.