Living in remote Australia costs more. Freight, fuel, housing and travel to see family all add up, and since 1945 the tax system has offered a modest recognition of that in the form of the zone tax offset. It is still available for the 2025-26 return you are lodging now and for the 2026-27 year, but the eligibility rules are stricter than most people assume.
This guide explains who qualifies, how the ATO decides where your “usual place of residence” is, the 183-day test and its carry-over rules, the current fixed amounts for Zone A, Zone B and the special areas, and how to claim through myTax or your tax agent. It is checked against the ATO’s zone tax offset page and the myTax 2026 instructions.
If you have moved to or from a remote town, work a fly-in fly-out roster, or have been told you “should be getting the zone rebate”, this is the article to read before you lodge. For the general rates that your offset is applied against, see our guide to the ATO tax rates for 2025-26.
Key takeaways
- Eligibility is about where you live, not where you work. Your usual place of residence must be in Zone A, Zone B or a special area. FIFO and DIDO workers whose home is outside the zone cannot claim.
- The 183-day test: your usual residence must be in a zone for 183 days or more in the income year, with carry-over rules for the year you move in.
- Fixed amounts: $1,173 for a special area, $338 for Zone A and $57 for Zone B, plus a dependant-related base amount in some cases.
- It is non-refundable. It reduces tax payable to zero at most and does not reduce the Medicare levy.
- Centrelink remote area allowance reduces the offset; an employer’s remote area allowance does not, but it is taxable income.
- Claim it at “Zone or overseas forces” in your tax return. The ATO’s calculator works out the amount, and you can only claim one of the zone and overseas forces offsets.
Zone tax offset at a glance
| Zone | Fixed amount (2025-26 and 2026-27) | Examples of localities (check the ATO list) |
|---|---|---|
| Special area (within Zone A or B) | $1,173 | Kununurra, Lord Howe Island, Tennant Creek and other locations far from any sizeable town |
| Zone A | $338 | Darwin, Alice Springs, Mount Isa, Broome, Port Hedland, Karratha |
| Zone B | $57 | Townsville, Cairns, Mackay, Kalgoorlie, Broken Hill |
Source: ATO, Zone tax offset, base amounts table. Locality examples are drawn from the ATO’s Australian zone list and its own worked examples; the list is not exhaustive and boundaries are defined in tax law, so always confirm your address with the ATO list or calculator.
What is the zone tax offset?
The zone tax offset is a tax offset for people who are residents of specified remote or isolated areas of Australia. The ATO describes its purpose as helping with the higher cost of living, isolation and other factors that come with living in these areas. Offshore oil and gas rigs are specifically excluded.
It is an offset, not a deduction. A deduction reduces your taxable income; an offset is taken directly off the tax you would otherwise pay. A $338 offset is therefore worth $338 to anyone with at least that much tax payable, whatever their marginal rate. Because it is non-refundable, it cannot create a refund on its own and cannot be used against the Medicare levy. The Parliamentary Library has a useful history of the offset, which began as a deduction in 1945 and became a rebate in 1975; the fixed amounts have not been indexed since the early 1990s, which is why they are now small relative to remote living costs.
Which areas are Zone A, Zone B and special areas?
The Zone A and Zone B boundaries are defined in the Income Tax Assessment Act 1936 and cover, broadly, the north and the arid interior of the continent plus a number of islands. Zone A is the more remote tier (most of the Northern Territory, the Kimberley and Pilbara, Cape York and the far north-west of Queensland); Zone B is the less remote tier (for example the Queensland coast from about Mackay north, the Western Australian goldfields and far-west New South Wales).
Within each zone there are special areas – localities that are especially isolated, generally because they are more than 250 kilometres by the shortest practicable route from the centre of an urban area of 2,500 or more people. Special areas attract the much larger $1,173 fixed amount regardless of whether they sit in Zone A or Zone B. Lord Howe Island, Kununurra and Tennant Creek are examples the ATO uses.
The ATO publishes an Australian zone list of localities and notes that it is not exhaustive and is continually reviewed, so a locality that is not listed may still qualify if it meets the legal tests. If your town is not on the list, do not simply assume you are ineligible; ask the ATO or your tax agent to check the boundary against the legislation.
Who is eligible? The usual place of residence test
The ATO bases eligibility on your usual place of residence. In its words, “You’re not eligible if you work in a qualifying remote or isolated area but don’t live there. For example, if you’re a fly-in-fly-out worker.” To claim, your usual place of residence must be both in a remote or isolated area and your residence for 183 days or more during the income year.
Your usual place of residence is where your life is based: where your family lives, where your belongings are, where you are on the electoral roll, where your car is registered and where you return to between work trips. Employer-provided accommodation at a mine site or hospital is not your usual place of residence, no matter how many nights you sleep there. The ATO’s own examples make the point:
- Levi lives in Adelaide and flies to Alice Springs for 12-day shifts. He is in Alice Springs for more than 183 days a year, but Adelaide is his usual place of residence, so he cannot claim.
- Jonte lives in Darwin (Zone A) and drives to a mine at Kununurra (a Zone A special area) for 14 days at a time. He can claim the Zone A offset because Darwin is his home. He does not get the special area amount, because his home is not in the special area.
- Angela works rotations at Darwin Hospital but lives in Auckland, where she is buying a house, keeps her car and is enrolled to vote. She is not eligible: her usual place of residence is outside Australia.
The same logic applies to drive-in drive-out workers, seasonal workers and anyone with two homes. If your circumstances are unusual – for example you have moved your family to a remote town but keep a city property – the test is still where you genuinely live. Residency for tax purposes is a related but separate question; see our guide to foreign tax residency rules in Australia if you have overseas ties.
The 183-day test and the carry-over rules
Your usual place of residence must be in a zone for 183 days or more during the income year (1 July to 30 June). The days do not have to be continuous: holidays and work trips away from home do not break the count, because your usual place of residence has not changed. What matters is where your home was on each day, not where you physically were.
If you moved into a zone part-way through the year and fall short of 183 days, two carry-over rules can help:
- First-year carry-over. If you could not claim in the year you moved in because you were there for fewer than 183 days, you can add those days to the current year, provided the combined total is 183 or more, your residence in the zone in the current year includes 1 July, you lived there for the full year in any years in between, and the continuous period is under five years.
- Two part-years. If your usual place of residence was in a zone for less than 183 days in each of two consecutive years and you could not claim in the first, you can claim in the second where the combined days exceed 182.
Example: moving to a special area (from the ATO)
Narendra moves from Sydney to Lord Howe Island, a Zone A special area, on 23 March 2025 and moves back to Sydney on 31 October 2025. He cannot claim in his 2024-25 return because he was there for only 100 days. In his 2025-26 return he can claim, because his 100 days in 2024-25 plus 124 days in 2025-26 come to 224 days, more than 183.
How much is the zone tax offset?
The offset has two parts. The fixed amount depends on your zone: $1,173 for a special area, $338 for Zone A and $57 for Zone B. These apply for both 2025-26 and 2026-27. On top of that you may be entitled to a base amount if you maintained a child under 21 or a full-time student under 25 during the year (subject to their adjusted taxable income), or if you were entitled to the invalid and invalid carer tax offset. The base amount is a percentage of the relevant dependant offsets – in the Productivity Commission’s summary of the law, 50 per cent for special areas and Zone A and 20 per cent for Zone B – and it can lift the total well above the fixed amount for families.
Two things reduce the offset. If you were in the zone for part of the year under the carry-over rules, the amount is apportioned. And if you received a remote area allowance from Centrelink, the offset is reduced by that amount, because the allowance is doing the same job. The ATO’s zone or overseas forces tax offset calculator handles all of this: you enter your dates, your zone, your dependants’ adjusted taxable income and any Centrelink remote area allowance, and it gives you the figure to put in your return.
Worked examples
Priya lives in a special area in the Kimberley all year, has no dependants and has $8,000 of tax payable before offsets. Her $1,173 fixed amount reduces her tax to $6,827. Tom lives in Townsville (Zone B) all year with no dependants and $8,000 of tax payable; his $57 fixed amount reduces it to $7,943. Both still pay the Medicare levy in full, because the offset does not apply to it.
Sam lives in Darwin (Zone A) with two children under 21 who have no income of their own. As well as the $338 fixed amount, Sam is entitled to a base amount worked out from the notional dependant offsets for the children. The calculator does the arithmetic; the result is typically several hundred dollars more than the fixed amount alone.
Rule of thumb
If your home is in a zone, you lived there most of the year and you paid tax, claim the offset. If your home is in Perth, Brisbane or anywhere else outside the zones and you only work in the zone, you cannot claim, however long your swings are.
How to claim the zone tax offset
- Confirm your zone. Check your locality against the ATO’s Australian zone list, or ask your tax agent to check the legislative boundary if your town is not listed.
- Count your days. Work out the number of days your usual place of residence was in the zone in the income year, and whether a carry-over rule applies.
- Gather dependant details. You need the adjusted taxable income of any child under 21 or student under 25 you maintained, and the amount of any invalid or invalid carer tax offset you are entitled to.
- Note any Centrelink remote area allowance you received during the year.
- Run the ATO calculator and record the result.
- Enter it in your return at the “Zone or overseas forces” item. In myTax you first personalise your return to show that section. If you qualify for both the zone and the overseas forces offset, you can only claim one – take the higher.
You must lodge a tax return to receive the offset, and you must have assessable income that you pay tax on. If you have outstanding returns from earlier years in which you lived in a zone, lodge them: the offset can be claimed in each eligible year, and the ATO notes that the offset is not assessable income for Centrelink purposes.
Records to keep
The ATO may ask you to show that your usual place of residence was in the zone. Keep evidence that puts your home there for the relevant days: a lease or mortgage statement, utility bills in your name at the zone address, your driver licence and vehicle registration, electoral enrolment, school enrolment for children, and bank statements showing everyday spending in the town. If you moved during the year, keep removalist invoices or the lease start date to fix the day your residence changed. Records should be kept for five years from the date you lodge.
Common mistakes
- Claiming on the strength of a work roster. Days at a mine camp are not days of residence. This is the most common reason the ATO denies the offset.
- Claiming the special area amount for a Zone A home. Jonte in the ATO example works in a special area but lives in Darwin, so he gets $338, not $1,173.
- Forgetting the Centrelink remote area allowance. It must be deducted from the offset.
- Treating an employer’s remote allowance as the offset. An award-based remote or district allowance from your employer is taxable income; it does not replace or reduce the zone offset. Check your award on the Fair Work Ombudsman site if you are unsure what you are being paid.
- Miscounting the move-in year. Count from the day your home actually moved, and use the carry-over rule in the following year rather than claiming the first year on fewer than 183 days.
- Expecting it to offset the Medicare levy or produce a refund. It cannot do either.
The zone tax offset is one of several concessions worth checking if you live or work remotely; see our overview of tax concessions and, for travel between home and remote work sites, our guide to the ATO overnight travel allowance rules.
FAQ about the zone tax offset
Can FIFO workers claim the zone tax offset?
Only if their usual place of residence – their actual home – is in a zone. The ATO is explicit that you are not eligible if you work in a remote area but do not live there, and it gives the example of a fly-in fly-out worker. An engineer who lives in Adelaide and flies to Alice Springs for 12-day swings cannot claim, even though he spends more than 183 days in the zone. A Darwin resident who drives to a Kununurra mine for 14-day shifts can, because Darwin is her home and is in Zone A.
How much is the zone tax offset?
The fixed amounts are $1,173 for a special area (within Zone A or Zone B), $338 for Zone A and $57 for Zone B. You may also be entitled to a base amount if you maintained a dependent child under 21 or a full-time student under 25, or were entitled to the invalid and invalid carer tax offset. The ATO’s zone or overseas forces tax offset calculator works out the total for you.
What if I lived in the zone for less than 183 days?
You may still qualify under the carry-over rule. If you could not claim last year because you were in the zone for fewer than 183 days, you can count those days together with this year’s days, provided the combined total is 183 or more and your residence in the zone includes 1 July of the current year. Days can also be combined across two part years where the total exceeds 182 days.
Does a remote area allowance affect the offset?
Yes, but only the remote area allowance paid by Centrelink (Services Australia). The ATO reduces your zone tax offset by the amount of any Centrelink remote area allowance you received. Allowances paid by your employer under an award for working in a remote location are ordinary assessable income and are not deducted from the offset.
Is the zone tax offset refundable?
No. It is a non-refundable offset that reduces the tax you would otherwise pay, down to zero. If you have no tax payable – for example because your income is under the tax-free threshold – the offset gives you nothing, and any unused amount is not paid out or carried forward. It does not reduce the Medicare levy.
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If you have moved to a remote town, work a FIFO or DIDO roster, or have dependants and are not sure what base amount you are entitled to, we can work out your eligibility and the exact figure before you lodge. Nanak Accountants prepares individual returns for clients across Australia. Call 1300 626 258 or book a free 15-minute consultation.
This article is general information only and is not personal tax advice. Eligibility rules, fixed amounts and the carry-over tests were checked against the ATO’s zone and overseas forces tax offsets guidance and the myTax 2026 instructions on 6 October 2026.
