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The zone tax offset (ZTO) is a tax rebate offered by the Australian Tax Office (ATO) for taxpayers who live in remote areas of Australia whereas, the overseas forces tax offset is for members of the Australian Defence Force or a United Nations Armed Force who are serving in a specific overseas location. If you live in a remote area or serve in the forces overseas, you may be entitled for either the ZTO or overseas forces tax offset. You can qualify for both the ZTO and the overseas force offset, but you can claim only one of these offsets. You may claim whichever offset is highest.
The eligibility criteria for the ZTO changed as of 1st July 2015, previously the tax offset used to be available for people who live or work in remote zoned areas. Now to be eligible for the ZTO from that date, your usual place of residence throughout the year must be within a remote area of Australia. For example, the taxpayer’s residence is in Melbourne and he/she is working on a fly-in and fly-out basis to work in a remote area, he/she is no longer eligible for the offset. Currently, to be eligible for this tax offset, a taxpayer must reside in a specified remote area for more than 183 days in an income year.
You may be eligible to claim an overseas forces tax offset if you serve in a specified overseas locality as a member of the Australian Defence Force or a United Nations Armed Force. To claim the full tax offset, you must have served in an overseas locality for 183 days or more in the income tax year. If the duration was less than 183 days, you may be able to claim part of the tax offset.