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. It is 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. In your case, you lived in a rural town in the relevant financial year. The town lies outside of the ordinary area of Zone B, and therefore, all residents of the town and its surrounding properties are ineligible for the zone tax offset under section 79A of the ITAA 1936. Subsection 79A(3E) of the ITAA 1936 allows the Commissioner the 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) 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 Accordingly, you are not entitled to a zone tax offset.