Private ruling: Zone tax offset
Published: August 2014
Ruling period: Year ended 30 June 2014 | Year ended 30 June 2015 | Year ended 30 June 2016 | Year ended 30 June 2017 | Year ended 30 June 2018
Date scheme commenced: 1 July 2013

Ruling: Q1: Are you entitled to a zone tax offset when you are in Place A for more than 182 days of the income year? | 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 generally refer to the mainland of Australia and islands forming part of Australia. The Tax Office Australian Zone List (the List) is also used when considering a taxpayer's entitlement to the zone tax offset. The List is used when determining whether an area is in Zone A or Zone B, a special area in either Zone A or Zone B or in no zone. We accept that Place A may be remote in respect of accessability and the lack of services. However, Place 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, as Place A is not in a zone the Commissioner has no discretion to treat Place A as being in a zone and you are not entitled to a zone tax offset.

Relevant facts: You are a fly in fly out worker who works for more than 182 days per year at Place A.