| Disclaimer This edited version has been archived due to the length of time since original publication. It should not be regarded as indicative of the ATO's current views. The law may have changed since original publication, and views in the edited version may also be affected by subsequent precedents and new approaches to the application of the law. You cannot rely on this record in your tax affairs. It is not binding and provides you with no protection (including from any underpaid tax, penalty or interest). In addition, this record is not an authority for the purposes of establishing a reasonably arguable position for you to apply to your own circumstances. For more information on the status of edited versions of private advice and reasons we publish them, see PS LA 2008/4. |
Edited version of private ruling
Authorisation Number: 1011616587542
This edited version of your ruling will be published in the public Register of private binding rulings after 28 days from the issue date of the ruling. The attached private rulings fact sheet has more information.
Please check this edited version to be sure that there are no details remaining that you think may allow you to be identified. Contact us at the address given in the fact sheet if you have any concerns.
Ruling
Subject: Zone Tax Offset
Does the Commissioner of Taxation have a discretion to treat the location where you live as being within a zone area for the purposes of the zone tax offset?
No.
This ruling applies for the following period:
1 July 2009 to 30 June 2010
The scheme commences on:
1 July 2009
Relevant facts and circumstances
You live in a location in Australia.
You lived in that location for the whole of the income year.
The location is not within a zone area for the purposes of the zone tax offset.
You have stated that the location has a population of approximately a few thousand people and is approximately a few hundred kilometres from a regional town in the same state which is in Zone B and has a population of many thousands of people.
You believe that the location where you live is an isolated area, with a higher cost of living encountered by residents of this area in comparison with other parts of Australia.
You have requested that the location where you live be treated as being in a zone area for the purposes of the zone tax offset.
Relevant legislative provisions
Income Tax Assessment Act 1936 Section 79A
Income Tax Assessment Act 1936 Subsection 79A(3B)
Income Tax Assessment Act 1936 Subsection 79A(3D)
Income Tax Assessment Act 1936 Subsection 79A(3E)
Income Tax Assessment Act 1936 Subsection 79A(4)
Income Tax Assessment Act 1936 Schedule 2
Reasons for decision
Summary
There is no discretion in the income tax law for the Commissioner to extend the zone boundaries to treat a point which is not located within a zone area as being in a zone. The zone boundaries are set out in the income tax law, and the place where you live is not within these boundaries. The Commissioner has no discretion to change the boundaries to treat that place as being within a zone area.
Detailed reasoning
A zone tax offset, ascertained in accordance with section 79A of the Income Tax Assessment Act 1936 (ITAA 1936), is granted to individuals who are residents of certain areas in Australia as an income tax concession in recognition of the disadvantages that they are subjected to because of the uncongenial climatic conditions, isolation and high cost of living in comparison with other parts of Australia. The amount of the tax offset allowable depends on whether the taxpayer is a resident in Zone A, Zone B or in a special area within each of those zones.
A zone tax offset is only allowable to individuals who qualify for the offset by having resided in a relevant area (Zone A, Zone B, the special area in Zone A or the special area in Zone B). An individual is a resident of a relevant area in a year of income if any of the following tests in subsection 79A(3B) of the ITAA 1936 applies:
(a) he or she resided there for more than one-half of the year of income
(b) he or she was actually in the relevant area for more than one-half of the income year
(c) he or she died during the income year and at the date of death resided in the relevant area
(d) in the circumstances stated in paragraph 79A(3B)(d) or 79A(3B)(e), he or she resided or was actually in the relevant area for more than 182 days in two consecutive years of income.
Subsection 79A(4) of the ITAA 1936 defines Zone A and Zone B to mean the areas described in Part I and Part II of Schedule 2 to the ITAA 1936.
The Tax Office Australian zone list is a tool which can also be used to find out whether a place in Australia is located in a zone for the purposes of the zone tax offset. The Australian zone list is available on our website.
A higher amount of tax offset (than that for Zone A or Zone B) is allowable if an individual resides in the 'special area' in either Zone A or Zone B. 'Special area' is defined in subsection 79A(3D) of the ITAA 1936 as being those points in Zone A or Zone B that were not, as at 1 November 1981, situated 250 kilometres or less by the shortest practicable surface route from the centre point of the nearest urban centre with a census population (from the 1981 census), of not less than 2,500.
Under subsection 79A(3E) of the ITAA 1936, the Commissioner has a discretion to treat a point in either Zone A or Zone B that is not in a special area in that zone as being in a special area in that zone if the point is adjacent to, or in close proximity to, the special area. It must be appropriate, having regard to all the circumstances, to treat the point as being a point in the special area in the zone.
You believe that the place where you live is an isolated area with a high cost of living. You resided there for the whole of the income year. However, that place is not an area described in Part I or Part II of Schedule 2 to the ITAA 1936, and therefore is not an area in Zone A or Zone B (as defined in subsection 79A(4) of the ITAA 1936).
The income tax law provides the Commissioner with some discretion to treat a point near to a special area of a zone as if it were within that special zone area. However this discretion, which is provided by subsection 79A(3E) of the ITAA 1936, is applicable specifically only to points already within either Zone A or Zone B.
There is no discretion in the income tax law for the Commissioner to extend the zone boundaries to treat a point which is not located within a zone area as being in either Zone A or Zone B. The zone boundaries are set out in the income tax law (Part I and Part II of Schedule 2 to the ITAA 1936), and the place where you live is not within these boundaries. The Commissioner has no discretion to treat that place as being within a zone area.
Copyright notice
© Australian Taxation Office for the Commonwealth of Australia
You are free to copy, adapt, modify, transmit and distribute material on this website as you wish (but not in any way that suggests the ATO or the Commonwealth endorses you or any of your services or products).
