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Edited version of your written advice

Authorisation Number: 1013098023341

Date of advice: 27 September 2016

Ruling

Subject: Tax Offset - zone - special zone allowance

Question 1

Do you reside within either Zone A, Zone B or a special zone for the purposes of the zone tax offset?

Answer

No

This ruling applies for the following period:

Year ended 30 June 2016

The scheme commences on:

1 July 2015

Relevant facts and circumstances

You have resided in your area for greater than 183 days in the income year.

Your residence is not included in any of the zone offset area lists.

Your residence is in excess of 250 kilometres by road from your employment.

Relevant legislative provisions

Income Tax Assessment Act 1936 Section 79A

Income Tax Assessment Act 1936 Subsection 79A(1)

Income Tax Assessment Act 1936 Subsection 79A(2)(a)

Income Tax Assessment Act 1936 Subsection 79A(3D)(a)

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

Section 79A of the Income Tax Assessment Act 1936 (ITAA 1936) provides a tax offset for residents of defined isolated areas.

A zone tax offset is available for people who live in the defined geographic zones. 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 prescribed 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.

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.

In your case, you have resided in your area for a full financial year. We accept that your area may be remote in respect of distance from the nearest urban centre. However, your residence 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.

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 your area is not within these boundaries. The Commissioner has no discretion to change the boundaries to treat your area as being within a zone area.

Consequently, you are not entitled to a zone tax offset.

For your information

The ATO's 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, www.ato.gov.au.

ATO view documents

Taxation Ruling TR 94/27

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