Edited version of your written advice

Authorisation Number: 1012884960101

Date of advice: 25 September 2015

Ruling

Subject: Zone tax offset

Question

Are you entitled to a zone tax offset?

Answer

No.

This ruling applies for the following period

Year ended 30 June 2015

The scheme commenced on

1 July 2014

Relevant facts

You work at sea.

You are on a XX days on XX days off roster. You spend approximately XX days at sea when working.

You usually fly into city A then sail out to location B for 28 days and then return to city A.

When not at sea you live at city C.

Relevant legislative provisions

Income Tax Assessment Act 1936 Section 79A

Reasons for decision

To qualify for a zone tax offset you must satisfy one of the residence requirements contained in subsection 79A(3B) of the Income Tax Assessment Act 1936 (ITAA 1936).

Subsection 79A(3B) of the ITAA 1936 provides that a taxpayer is treated as a resident of a particular area, being the prescribed area, Zone A, Zone B, or a special area within either of those zones. For the purposes of the zone tax offset, 'Zone A' and 'Zone B' is defined at section 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.

For the purposes of section 79A of the ITAA 1936, 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. 

Taxation Ruling TR 94/27 Income tax: zone rebate for residents of isolated areas provides guidelines to assist in determining whether an individual taxpayer is eligible for a zone tax offset. As outlined in paragraph 17 of TR 94/27, for the purposes of subsection 79A(3B), if an individual resided on a trawler which was at sea for more than one-half of a year of income, the individual is not a resident of either Zone A or Zone B. The individual is therefore not entitled to any zone tax offset. 

TR 94/27, at paragraph 18, also explains that if an individual was at sea for less than one-half of a year of income, and resided in a zone area (for example, Zone B) for the balance of the year, that individual will be eligible for a zone tax offset as he or she was physically present in a zone area for more than one-half of the year of income.

Taxation Board of Review No. 3 in Case P82, 82 ATC 399; Case 14 26 CTBR (NS) 111 found that a deckhand on a prawn fishing boat who was at sea for approximately six days to each one spent in port could not be said to be a resident of a prescribed area as defined in subsection 79A(4) of the ITAA 1936.

Accordingly, a person living on a ship that is located offshore is not residing or spending time in a prescribed area, and as such does not qualify for a zone rebate.

In your case, you were physically present on board a ship for 28 days at a time. When you were not working on board a ship, you resided in city C.

Location B is not an area described in 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 section 79A(4) of the ITAA 1936.

Your home in city C is also not in a 'Zone A' or 'Zone B' area.

Although city A is in a zone area, your time in city A did not exceed 183 days.

Therefore, as you did not reside or spend time in a prescribed area for the minimum time required you are not eligible for the zone tax offset under section 79A of the ITAA 1936.