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Zone or Overseas Forces Tax Offset

The Zone Tax Offset (ZTO) is a concessional tax offset available to individuals which reduces their tax liability in recognition of the isolation, extreme climate and high cost of living associated with living in particular locations.

Eligibility is based on living in a defined geographic zone for a minimum of 183 days per year. The specified remote areas of Australia are divided into two zones, Zone A (which is the more remote areas so has a higher tax offset) and Zone B. In each zone there are areas that are particularly isolated (‘special areas’), so they receive higher tax offsets again.

The zone tax offsets are calculated as:

  • Zone A: $338 + 50% of certain Dependent Tax Offset Amounts (DTOA).
  • Special Zone A: $1,173 + 50% of certain DTOA.
  • Zone B: $57 + 20% of certain DTOA.
  • Special Zone B: $1,173 + of certain DTOA.

From 1st July 2016 ‘fly-in fly-out’ (FIFO) and ‘drive-in drive-out’ (DIDO) workers will be excluded from the ZTO where their normal residence is not within a designated ‘zone’.

The overseas forces tax offset applies to taxpayers who were a member of the Australian Defence Force or a United Nations armed force during the income year in a specified overseas locality. To claim this offset their income from the overseas service must not be exempt.

The overseas forces tax offset is calculated as $338 + 50% of certain dependent tax offset amounts.