Remote tax breaks need overhaul: report

Paul Osborne
(Australian Associated Press)


A new report has called for an overhaul of long-standing tax breaks for people living in remote parts of Australia.

About half a million people live and work in remote Australia, with many benefiting from three types of concessions: the zone tax offset, the remote area allowance and fringe benefits tax.

The Productivity Commission found in a draft inquiry report released on Wednesday the zone tax offset was an “ineffective and blunt instrument” and went to people who could not longer be considered to live in “isolated” areas.

“Higher wages in the zones across a wide skill spectrum suggests that the market compensates workers, at least to some extent, for the disadvantages of remote living,” the report said.

“For those looking to settle in remote communities, issues of liveability and lifestyle also play an important part, with remote living largely a matter of choice. The (zone tax offset) should therefore be abolished.”

The report said the remote area allowance – which went to people on income support in remote areas – needed a refresh and an update of its boundaries.

Fringe benefits tax concessions, such as those for employer-provided housing in areas including Western Australia’s Pilbara and Queensland’s Bowen Basin, were poorly targeted and should be redesigned.

The housing concession alone was estimated to cost the federal government as much as $430 million a year.

The commission has invited comment on its report before the final recommendations are made to government in February 2020.


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Categories: Tax