Private ruling: Tax offset - zone
Published: August 2013
Ruling period: Year ended 30 June 2013
Date scheme commenced: 1 July 2012

Ruling: Q1: Are you entitled to a zone rebate while you worked and lived on X Island? | A1: No.

Relevant facts and circumstances: You worked and lived on an Island This Island is not included in any of the zone offset area lists

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 remote areas are called Zone A and Zone B. Since 1 November 1981 a special area zone tax offset in lieu of the ordinary zone tax offset for Zone A and Zone B has been available for people residing or spending the required period of time in particularly isolated areas. Such areas are referred to as the 'special area' within either zone. If a person is a resident in the special area in Zone A or Zone B, paragraph 79A(2)(a) of the ITAA 1936 provides a higher amount of rebate than for a resident in either of those zones. 'Special area' within Zone A or Zone B is defined in paragraph 79A(3D)(a) of the ITAA 1936 as being points in that Zone situated in excess of 250 kilometres by the shortest practicable surface route from the centre point of the nearest urban centre with a census population, from the 1981 census, of 2,500 or more. 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. In your case, we accept that the Island may be remote in respect of accessibility and the lack of services. However, it 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.