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Edited version of private ruling
Authorisation Number: 1011504991318
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Ruling
Subject: Zone tax offset
Question:
Is community X within a special area of zone A for the purposes of calculating the zone tax offset?
Answer: Yes.
This ruling applies for the following period
Year ended 30 June 2009
The scheme commenced on
1 July 2008
Relevant facts
The school is within community X and situated in the relevant state.
Reasons for decision
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 areas are comprised of two zones - Zone A and Zone B. Zone A comprises those areas where the above factors are more pronounced whilst Zone B comprises the less badly affected areas.
A higher amount of rebate (than that allowable for a resident of Zone A or Zone B) is allowable if an individual resides in the 'special area' in either Zone A or Zone B. The term 'special area' is defined in subsection 79A(3D) 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.
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 order for an individual to be eligible for a zone tax offset, a taxpayer must satisfy one of the residency tests as outlined in subsection 79A(3B) of the ITAA 1936. These tests are:
a) the individual resided in the zone for more than one-half of the year of income
b) the individual was actually in the relevant area for more than one-half of the income year
c) the individual 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) of the ITAA 1936, he or she resided or was actually in the relevant area for more than 182 days in two consecutive years of income.
According to the list, community X is situated within a special area of zone A. This is because it is not 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.
Therefore, providing you satisfy one of the residency tests outlined above, you will be entitled to claim a special area zone tax offset in the 2008-09 income year.