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Ruling

Subject: Zone tax offset

Question

Where you spend part of a day, but not necessarily overnight, in a zone area, does this count as a day for the purposes of determining how many days you spent in that zone area?

Answer

Yes.

This ruling applies for the following periods:

Year ended 30 June 2012

Year ending 30 June 2013

Year ending 30 June 2014

The scheme commenced on:

1 July 2011

Relevant facts and circumstances

As a part of your employment you travel to areas within a zone on more than 183 days each year.

You spend up to 12 hours in the area per day.

Sometimes you stay overnight in the area, but not always.

Relevant legislative provisions

Income Tax Assessment Act 1936 Section 79A

Reasons for decision

Section 79A of the Income Tax Assessment Act 1936 allows a tax offset for individuals who are classed as residents of specified remote areas of Australia. These areas are referred to as either a Zone A or Zone B area. A greater tax offset is available for people who have been in particularly isolated parts of Zone A or Zone B. Such areas are referred to as the 'special area' within either zone.

Taxation Ruling TR 94/27 provides guidelines in determining whether an individual is in fact a resident of a zone area. TR 94/27 states at paragraphs 10 to 12:

For the purposes of section 79A, an individual may be a 'resident' of a relevant area, even though he or she did not 'reside' in the area in the ordinary sense of the word, if the individual was actually in that area, whether continuously or intermittently, for more than one-half of the year of income.

In determining whether a person has resided or actually been in the relevant area for the required number of days, we consider that, for the purposes of the residence test in subsection 79A(3B), the word 'day' includes any one or more parts of a calendar day.

There is no definition of 'day' in the Income Tax Assessment Act 1936. Whether a fraction or fractions of a day may be treated as being a whole day depends on the intention and the context of the statute in question. We accept that in its context in subsection 79A(3B), the word 'day' is intended to include a fraction or fractions of a day.

Therefore, an individual need not actually reside in a zone area in order to qualify for a zone tax offset. An individual can merely be physically present in a zone for a small portion of a day (ie. a truck driver passing though a zone via his route) which can count towards the required 183 days.

Application to your case

As a part of your employment duties, you are required to pass through certain areas which are considered to be zone areas.

You have stated that you are physically present in these zone areas for at least 183 days in an income year; however you do not always stay in the area overnight.

In accordance with the guidelines provided in TR 94/27, the days where you only spend a portion of the day in a zone area still count towards the days you spend in that area for the purposes of the zone tax offset.