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Time for the zone tax offset to go

Time for the zone tax offset to go

The zone tax offset, claimed by almost half a million Australians, will be scrapped if the recommendations of the Australian Government Productivity Commission are implemented.

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The Australian Government Productivity Commission has recommended that the zone tax offset (ZTO) be abolished on the basis that there is no compelling, contemporary justification for it to continue.

According to its draft report on Remote Area Tax Concessions and Payments, the offset is ineffective, poorly targeted and does not deliver on its original objective, nor any others that have been ascribed to it.

A confused purpose with outdated zones

The ZTO was introduced in 1945 to assist employees with the cost of living in remote areas by reducing income tax paid on higher wages.

Except for some minor exceptions, the outer border of the ZTO zones have been unchanged since 1945. Many qualifying areas included in Zone B such as Mackay, Townsville and Cairns, though once clearly isolated, have developed into well-serviced cities with significant populations, bringing into question the ZTO’s appropriateness in these regions and many others

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