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Edited version of your written advice
Authorisation Number: 1012698414372
Ruling
Subject: Zone tax offset
Question
Does Town X lie 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 2014
The scheme commences on
1 July 2013
Relevant facts and circumstances
You have worked in Town X, for more than 183 days in the income year.
Relevant legislative provisions
Income Tax Assessment Act 1936 Section 79A
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 (formerly called a rebate) for residents of defined isolated areas
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 amount of the tax offset allowable depends on whether the taxpayer lived, or worked for the required period of time in Zone A, Zone B or in a special area within each of those zones.
In your case, you have worked in Town X for more than 183 days. We accept that Town X may be remote in respect of accessibility and the lack of services. However, Town X is not an area described in Part I or Part II of Schedule 2 of 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 a zone. The zone boundaries are set out in the income tax law, and Town X is not within these boundaries. The Commissioner has no discretion to change the boundaries to treat Town X as being within a zone area.
Consequently, as Town X is not in a zone, you are not entitled to a zone tax offset.