Can You Get a Tax Offset for Living in Remote Areas or Serving Overseas? (Short Answer)
Yes ,if you live in a remote area of Australia or serve as a member of Australia’s defence forces overseas, you may be eligible for a Zone Tax Offset or an Overseas Forces Tax Offset. These offsets reduce the amount of tax you pay, based on where you live or serve and how long you’ve been there during the financial year.
In this article, you’ll learn exactly how these offsets work, who qualifies, how much you could claim, and what to watch out for when claiming them.
What Are Zone and Overseas Forces Tax Offsets?
Zone and Overseas Forces Tax Offsets are targeted tax benefits provided by the Australian Government to recognise the higher costs and challenges of living or working in remote areas or serving overseas in certain circumstances. These offsets are non-refundable, meaning they reduce the tax you owe but won’t give you a refund if you’ve paid no tax.
There are two separate offsets:
- Zone Tax Offset (ZTO): For Australian residents who live or work in remote areas, commonly referred to as Zone A or Zone B.
- Overseas Forces Tax Offset (OFTO): For members of the Australian Defence Force (ADF) serving overseas, under certain conditions.
The Zone Tax Offset (ZTO), Explained
What is a Zone?
The Australian Taxation Office (ATO) has mapped out areas across the country classified as Zone A or Zone B. Zone A covers the most isolated regions, while Zone B includes less remote, but still isolated, areas. There are also areas known as Special Areas within Zone A, where even higher offsets apply due to extreme remoteness.
Who Can Claim the Zone Tax Offset?
To qualify for the ZTO, you must have:
- Lived or worked in a designated zone for 183 days or more during the financial year.
- The days do not need to be consecutive.
If you have less than 183 days but have lived in the zone for a continuous period spanning over two financial years, you may still qualify.
How Much is the Zone Tax Offset Worth?
The base offset amount varies depending on:
- The zone you lived in (Zone A, Zone B, or a Special Area).
- Whether you maintained a dependant.
For example, as of the latest rates:
- Zone A base offset: around $338
- Zone B base offset: around $57
- Special Areas: Zone A offset plus additional amounts
These amounts may increase if you maintain dependents.
✅ Tip: Maintaining a dependant includes spouses, certain children, and others you supported financially.
Important Notes About ZTO
- You can’t claim this offset if your only presence in the zone was due to normal holiday travel.
- The offset does not increase your tax refund beyond what you owe (it is non-refundable).
The Overseas Forces Tax Offset (OFTO) ,Explained
Who is Eligible for the Overseas Forces Tax Offset?
You may qualify for the OFTO if you:
- Are a member of the Australian Defence Force.
- Served overseas on a deployment.
- Were eligible for a specific deployment allowance during your service.
- Served for 183 days or more overseas during the financial year.
As with the ZTO, if your overseas service spans two financial years, you may still be eligible.
How Much is the Overseas Forces Tax Offset Worth?
The base amount for the OFTO is the same as the Zone A offset ($338), with possible increases if you maintained dependents.
However, if you are eligible for both the ZTO and OFTO in the same year, you will only receive the higher of the two offsets, not both.
How to Claim These Tax Offsets
You will claim the Zone or Overseas Forces Tax Offset when lodging your tax return through:
- myTax (the ATO’s online service);
- A registered tax agent; or
- Paper tax return (if applicable).
You’ll need to:
- Identify which offset you qualify for.
- Confirm the zone or deployment details.
- Count the number of days you lived or served in the zone.
- Disclose any dependents you maintain.
These details will calculate your offset automatically when you complete your return.
Common Mistakes and Pitfalls
1. Misunderstanding Zone Boundaries
Some areas might look remote but may not be classified as Zone A or B. Always check the ATO’s current zone listings.
2. Forgetting Dependants
Failing to include dependents may result in a lower offset amount.
3. Assuming Short-Term Trips Count
Living or working in a zone during a short-term project or holiday may not qualify unless you meet the 183-day rule.
4. Double Counting OFTO and ZTO
You cannot claim both offsets in full. You must take the higher one if both apply.
Why These Offsets Matter
While these offsets may not seem significant at first glance, they can make a real difference, especially when combined with other deductions and offsets. For ADF personnel and workers in regional Australia, they are a recognition of the higher costs and personal sacrifices often involved.
Whether you’re working in outback Queensland, stationed overseas, or supporting a family in a remote Northern Territory town, understanding these offsets ensures you don’t miss out on money you’re entitled to.
Final Thoughts
If you live remotely or serve overseas with the ADF, it’s worth checking your eligibility each year. Rules can change, zone maps are updated, and your personal circumstances (e.g., dependants) might vary year to year.
When in doubt, speak with a registered tax agent familiar with the complexities of offsets like these.
About The Author: Artur Osadchiy
Artur is a Certified Practising Accountant with over 30 years’ experience working as a trusted advisor to 600+ clients across Australia. Based in Melbourne, he started Tax Window with his wife Marina in 2009 and leads the firm’s tax and accounting team. In his free time, Artur enjoys watching the AFL (go Kangas!) and spending time with family.
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