Edited version of private advice

Authorisation Number: 4140079538038

Date of advice: 8 November 2019

Ruling

Subject: Income Tax: Usual place of residence - zone rebate for residents of isolated areas

Question

Are you a resident of X, for the purposes of claiming a rebate as a resident of an isolated area?

Answer

No

This ruling applies for the following period:

From the year ended 30 June 2016

The scheme commences on:

1 July 2015

Relevant facts and circumstances

You have worked in the remote area of X for the last 1X years as a security guard. You work on an eight days on and six days off roster.

When you are in X, you stay in a two bedroom unit that you share with a co-worker. The two bedroom unit is owned and provided by your employer, X, as part of your work contract.

You prepare your own meals at your own expense in the unit and maintain personal effects there.

You rent a property in Y. You fly in and out of X from Y for your rostered days of work. During your six days rostered off, you stay at the house you maintain in Y where you also keep household goods and personal effects.

Relevant legislative provisions

Income Tax Assessment Act 1936 Section 79A

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 climate conditions, are isolated, or where the cost of living is high.

Until 30 June 2015, a taxpayer was eligible for the Zone Tax Offset if they resided or worked in a specified remote area for more than 183 days in an income year.

The eligibility for the zone tax offset changed on 1 July 2015. The new requirements are set out in the explanatory memorandum of Tax and Superannuation Laws Amendment (2015 Measures No. 5). 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 Income Tax Assessment Act 1936 (ITAA 1936). These tests are:

·  The individual had their usual place of residence in a zone for more than one half of the year of income

·  The individual died during the income year and at the date of death their usual place of residence was in a zone.

·  In the circumstances stated in paragraph 79A(3B)(d) or 79A(3B)(e) of the ITAA 1936, he or she had their usual place of residence in a zone for more than 182 days in two consecutive years of income.

In summary, to be a resident of a zone a person's usual place of residence must be in the zone.

Taxation Ruling TR 94/27 Income tax: zone rebate for residents of isolated areas provides the factors taken into account by the Commissioner in determining whether a person resided in a zone area. The factors include the intended and actual length of stay in the area, the establishment of a home in the area, the existence of a residence outside the area and the durability of association that the individual has with the relevant area.

In your case, you maintain a residence in Y where you generally spend the 6 days off each fortnight. While you maintain personal effects in the unit in X, you also maintain household goods and personal effects in Y. You fly-in and out of X for the purposes of work. The unit where you stay while you work is provided for and owned by your employer.

Based on the facts, your usual place of residence is in Y. You are not a resident of X for the purposes of the Zone Tax Offset.