Zone Tax Offset and Overseas Forces Tax Offset for ADF members

Tax offsets (sometimes referred to as rebates) directly reduce the amount of tax payable on your taxable income. In general, offsets can reduce your tax payable to zero. However, they are often non-refundable (i.e. on their own they can't get you a refund).

It is common that ADF members are eligible for two types of offsets based on the geographic location in which they perform their work and normally reside.

Zone Tax Offset

As a member of the Australian Defence Force, if your usual place of residence is in a remote or isolated area of Australia, you may be entitled to claim a zone offset. The ATO maintains a list of zones and special areas that meet this criteria.

Your payment summary will disclose the number of days you spent in a particular zone that corresponds with the locations on the above list. Please note that your PAYG payment summary may not take into account the fact that to be eligible for this offset, your normal place of residence must be in the zone.

Please visit the Australian Tax Office’s zone and overseas offset page for further entitlement and calculation information.

Overseas Forces Tax Offset

An overseas forces tax offset may be available to you if you served overseas as a member of the ADF or UN Armed Forces during the tax year. This is only applicable if the income relating to the service was not exempt from tax (see Income from overseas deployment). To be eligible to claim the whole offset you must have worked in an overseas locality for 183 days or more. If your service was less than 183 days you may be eligible to claim part of the tax offset.

Your payment summary should indicate the number of days you have served in a particular zone. If this is the case please provide details of the period spent in the overseas location in the income section from your payment summary and any additional locations.

You are not able to claim both the Overseas Forces Tax Offset as well as the Zone Tax Offset for the same period of time.

Please visit the Australian Tax Office’s zone and overseas offset page for further entitlement and calculation information.

FAQs

How do I know if I am entitled to an offset?
For a zone offset, in order to be a resident you must have lived in an area for 183 days or more out of the tax year alternatively, 183 days or more in the previous two tax years and you did not claim the tax offset in the first tax year. Once you have identified your place of residence, determine whether it is classified as Zone A or Zone B. You can determine the classification of the zone relevant to you here.

For an overseas forces offset, determine if your place of service is a current overseas locality. A list of current overseas localities can be found here.