Draft report

Remote area tax concessions and payments: draft report

4 Sep 2019
Description

As one of the least densely populated countries in the world, large swathes of the Australian continent are ‘remote’: sparsely populated and distant from major cities. Many parts of remote Australia offer their residents a unique lifestyle, or a different set of employment opportunities to other parts of Australia. Living and doing business in remote places, however, can be challenging and demand resilience.

Australian governments at all levels have a long history of supporting people and businesses in remote Australia. As communities have continued to transition over time in response to economic, social and technological changes, there has been continued pressure to help sustain their long-term viability and prosperity.

The nature and scope of these policy interventions have evolved — mirroring the evolution of remote Australia itself. Some places that were undeniably remote in 1945 (when tax concessions for ‘isolated areas’ were introduced) have since become more developed and connected to the rest of the country and the world. Further, technological and economic developments have cushioned many of the difficulties stemming from distance, isolation, and a harsh climate.

Against this backdrop, the Commission has been asked to review three longstanding tax concessions and payments for residents and businesses in remote and certain regional areas: the zone tax offset (ZTO), the remote area allowance (RAA), and the fringe benefits tax (FBT) remote area concessions. These constitute small and discrete measures that sit within an existing, and much larger, tax and transfer system.

Key points:

  • Remote area tax concessions and payments are outdated, inequitable and poorly designed. They should be rationalised and reconfigured to reflect contemporary Australia.
  • Remote Australia has changed considerably since 1945. Many areas once considered isolated are no longer remote, and improvements in technology have helped reduce the hardships of life in remote Australia, although expectations have risen.
  • Today, close to half a million Australians live in remote places. The tyranny of distance can make living and doing business challenging. Some things that most Australians take for granted are not readily on hand. Yet many of those in remote Australia hold a strong personal or cultural connection to a place and their community as well as the way of life it offers. Others are attracted by job opportunities.
  • The zone tax offset (ZTO), the remote area allowance (RAA), and the fringe benefits tax (FBT) remote area concessions are broadly designed to mitigate some of the inherent challenges, and facilitate development in regional and remote Australia.
  • The ZTO is an ineffective and blunt instrument. There is no evidence to suggest that the ZTO currently affects where people choose to live or work. Some areas are no longer isolated, but remain eligible. Were it to be retained, the ZTO would need to be overhauled.
Publication Details
Language: 
English
License Type: 
CC BY
Published year only: 
2019
61
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Subject Areas
Geographic Coverage
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