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Edited version of your private ruling
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Ruling
Subject: Eligibility for zone tax offset
Question
Is a zone tax offset available to you when living and working on offshore vessels?
Answer
No
This ruling applies for the following periods:
Year ended 30 June 2008
Year ended 30 June 2009
Year ended 30 June 2010
Year ended 30 June 2011
Year ended 30 June 2012
Year ended 30 June 2013
The scheme commences on:
1 July 2007
Relevant facts and circumstances
For the last six years you have worked on various offshore vessels for up to six months of the year. These vessels change crew when the vessels travel in and out of port or by helicopter transfers. The working areas for the vessels range from 500 meters to 100 miles from the shore and operating in areas of north-west Western Australia and the Northern Territory.
Relevant legislative provisions
Income Tax Assessment Act 1936 section 79A
Income Tax Assessment Act 1997 section 8-1
Reasons for decision
A rebate is available under section 79A of the Income Tax Assessment Act 1936 (ITAA 1936) only to a person who resides, or spends time in a prescribed area. The prescribed areas, referred to as Zone A and Zone B, are specified in Schedule 2 of the ITAA 1936. These areas are defined as areas of mainland Australia, as well as specified islands off the Australian coastline.
Accordingly, a person living on a boat that is at all times located offshore is not residing or spending time in a prescribed area, and as such does not qualify for a zone rebate.
This view has been supported by the Board of Review in Case P82, 82 ATC 399; Case 14 26 CTBR (NS) 111. This case is also summarised in Taxation Ruling TR 94/27, at paragraphs 51 and 52, which state:
51. The case involved the determination of the place of residence of a taxpayer. The evidence disclosed that the taxpayer was a deckhand on a prawn fishing boat operating out of Groote Eylandt. Throughout the year of income the taxpayer lived on board the boat and did not own, rent or maintain a house or other form of residence on the island or on the mainland. The evidence further disclosed that throughout the year under review, the boat was at sea for approximately six days to each one spent in port.
52. A majority of the Board considered the fishing boat to be the taxpayer's place of residence. Since the boat was at sea for more than one half of the year of income and therefore outside the zone area, the taxpayer could not be said to be a resident of a prescribed area as defined in former subsection 79A(4). In the result no rebate was allowable.
Subsection 79A(2)(f) provides the Commissioner with discretion on the amount of rebate which he considers reasonable. It does not, however, provide the discretion to allow a rebate in circumstances where the legislation does not provide for any.
Accordingly, unless the other conditions for eligibility to the rebate, as set out in section 79A, are met the Commissioner may not allow any rebate.
These conditions relate to:
1. location - they must be located in a prescribed area; and
2. length of time they must reside or actually be in the relevant area for a period of 183 days or more, in a particular income year, or in certain circumstances as outlined in subsection 79A(3B) where they are resident or actually in a relevant area for 183 days or more over a period of two consecutive financial years.
Again, from the information provided by you, these conditions have not been met.
In Case Z40 92 ATC 361; (1992) 24 ATR 1120, the AAT considered whether the Commissioner's discretion under sec. 79A(3E) of the ITAA 1936 to treat an area "adjacent to or in close proximity to the special area" should be exercised in the case of an offshore location. In that case the taxpayer had spent time offshore on a natural gas drilling and production platform, situated on the North West Shelf.
The tribunal found that the discretion could not be exercised, as that discretion only provides for the Commissioner to treat an area that is within a Zone as being within a "special area" of that zone, it does not enable the Commissioner to treat an area that is outside of a zone area as being in a zone area.
In your case, whilst you were living and working on the vessel which is located offshore you are not within a zone area, and the Commissioner has no discretion to treat you as though you were.
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