The Zone Tax Offset (ZTO) is an income tax offset available to Australians who live and work in remote, regional, or isolated areas of Australia. It recognises that residents of these areas face higher costs of living, limited access to services, and other disadvantages compared to those living in metropolitan areas. The offset is applied through your tax return and reduces your income tax payable.
What Are the Tax Zones?
The ATO divides Australia’s remote areas into zones defined by their remoteness:
Zone A — Most Remote Areas
Zone A covers the most isolated parts of Australia. These include much of the Northern Territory, far north and north-western Western Australia, far north Queensland, and other very remote regions.
Zone A offset amount:
- Base amount: $338
- Plus 50% of any dependant relative rebate the taxpayer is entitled to
Zone B — Less Remote Areas
Zone B covers regions that are remote but less isolated than Zone A. These include parts of the Kimberley (WA), northern Queensland (outside Zone A), parts of South Australia, and other regional areas.
Zone B offset amount:
- Base amount: $57
- Plus 20% of any dependant relative rebate the taxpayer is entitled to
Special Areas
Certain communities that are particularly isolated but may not fall neatly into Zone A or B are designated Special Areas. Residents of special areas receive the same offset as Zone A, or in some cases an enhanced rate. Special areas are listed in Schedule 2 of the Income Tax Assessment Act 1936.
The 183-Day Residence Test
To claim the Zone Tax Offset, you must have genuinely resided in a zone for more than 183 days in total during the income year (1 July to 30 June). The 183 days do not need to be consecutive — absences for work, medical treatment, or holidays are taken into account.
Important: The offset is for people who live in the zone, not just those who work there. Fly-in fly-out (FIFO) workers who maintain their family home and principal residence outside the zone generally cannot claim the ZTO for days they spend at a remote worksite.
FIFO Workers and the Zone Offset
This is a common misconception. FIFO workers who spend 183+ days on a remote site may be tempted to claim the ZTO. However, the ATO’s position is that the ZTO requires genuine residence in the zone — meaning the zone is your home, not just your worksite.
If you are a FIFO worker whose family and permanent home are in Perth, Brisbane, or another capital city, you do not qualify for the ZTO even if you physically spend most of the year in a remote area.
The ATO has challenged many ZTO claims from FIFO workers. Seek advice from a registered tax agent before claiming if your situation involves commuting to remote work.
Remote Area Allowances and Other Benefits
In addition to the ZTO, some employers in remote areas provide remote area allowances to employees. Parts of these allowances may be exempt from income tax or offset by the remote area exemption provisions in the ITAA 1997. These apply separately from the ZTO and depend on the specific allowance and area.
How to Claim the Zone Tax Offset
The ZTO is claimed in your income tax return. In myTax, look for the “Zone or overseas forces” section. You will need to:
- Identify which zone (A, B, or Special) you lived in
- Confirm you met the 183-day residence requirement
- Enter the zone code in your return
The ATO may request evidence of residency (such as driver’s licence, utility bills, or council rates notices showing your residential address in the zone) if your claim is audited.
Related Articles
- Overseas Forces Tax Offset — ADF International Deployment
- Low Income Tax Offset (LITO) — How It Works
- Tax Offsets hub
- Taxes hub
Frequently Asked Questions
Which towns and areas are in Zone A or Zone B? The ATO publishes the full list of zones and special areas. You can search by postcode or locality using the ATO’s zone lookup tool at ato.gov.au. Common Zone A examples include Darwin, Broome, Kalgoorlie (Zone B for some postcodes), Katherine, Mount Isa, and Cairns (some areas Zone B).
I moved to a remote area halfway through the year. Can I still claim? You can claim for the portion of the year you were resident in the zone, provided you met the 183-day test. If you arrived in January and were in the zone for only 180 days by 30 June, you do not meet the test for that year.
Does the zone tax offset affect my Medicare levy? No. The ZTO reduces income tax only — it does not affect the Medicare levy calculation.
This article provides general tax information only. For advice tailored to your situation, speak with a registered tax agent. Find one through the Tax Practitioners Board register or visit MoneySmart.