Private ruling: Zone tax offset
Published: August 2013
Ruling period: Year ended 30 June 2013
Date scheme commenced: 1 July 2012

Ruling: Q1: Can you be considered to be residing in a special zone under the Commissioner's discretion in subsection 79A(3E) of the Income Tax Assessment Act 1936 ? | A1: No

Relevant facts and circumstances: You reside in a rural town. The town is located within 250km of a major population centre. The town not located in Zone A or Zone B.

Relevant legislative provisions: Income Tax Assessment Act 1936 Section 79A | Income Tax Assessment Act 1936 Schedule 2

Reasons for decision: Summary: Under section 79A of the Income Tax Assessment Act 1936 (ITAA 1936), residents of prescribed areas of Australia, known as Zone A and Zone B, are entitled to a tax offset. The tax offset is in recognition of the disadvantages to which they are subject because of the uncongenial climatic conditions, isolation and the high cost of living in comparison with parts of Australia not included in those prescribed areas. Schedule 2 of the ITAA 1936 defines the borders of these prescribed areas. Zone B is described as being: North of a line commencing at the northeastern corner of the Shire of Broadsound in the State of Queensland thence generally westerly and southerly by the boundaries dividing the Shires of Broadsound Belyando Jericho Bauhinia Booringa and Balonne from the Shires of Sarina Nebo Wangaratta Dalrymple Aramac Barcaldine Blackall Tambo Murweh and Paroo to the boundary dividing the states of Queensland and New South Wales…….. Subsection 79A(3D) of the ITAA 1936 allows a greater tax offset for residents of 'special areas' within either Zone A or Zone B that are located more than 250 kilometres from the nearest urban area with a population of 2,500 or more as of the 1981 census. Subsection 79A(3E) allows the Commissioner the discretion to consider an area located outside these 'special areas' as being located in a 'special area' if it is an area of extreme isolation or hardship. However, this discretion may only be exercised if the area is already located within either Zone A or Zone B. In your case, you reside in a rural town which is located more than 300 kilometres south of the closest Zone B boundary as defined in Schedule 2 of the ITAA 1936. The definition of 'adjacent' is not defined in Schedule 2, however the Macquarie Dictionary defines 'adjacent' as 'lying near, close, or contiguous; adjoining; neighbouring'. The town lies too far south of the Zone B boundary to be considered as being 'adjacent' to Zone B and is not specifically included in Schedule 2 of the ITAA 1936 as a prescribed area. Therefore, as the town does not lie within a prescribed area, the Commissioner does not have any discretion to consider it as a 'special area' for the purposes of the zone tax offset. Accordingly, you are not entitled to a zone tax offset.