The Productivity Commission (PC) has called for an overhaul of taxation concessions and payments for residents and businesses in remote areas, finding them to be “outdated, inequitable and poorly designed”.
In its report Remote Area Tax Concessions and Payments, the Commission called for the concessions and payments to be better targeted and fairer.
PC Commissioner, Jonathan Coppel said the Agency had been tasked to assess the Zone Tax Offset (ZTO), the Remote Area Allowance (RAA) and the Fringe Benefits Tax (FBT) remote area concessions.
“As a first step, the Commission held extensive consultations with communities and businesses in remote Australia,” Mr Coppel said.
“The Commission’s assessment is that the ZTO should be abolished,” he said.
‘Remote Australia has changed considerably since the ZTO was introduced in 1945. Some eligible areas, like Cairns, Townsville and Darwin, are no longer remote, and the ZTO has little influence on where people live or work.”
He said there was no clear role for the Government to compensate taxpayers for the disadvantages of life in remote areas.
“Many ZTO recipients are already compensated by higher remuneration and many enjoy the nature and pace of remote living,” Mr Coppel said.
He said that while the RAA had a legitimate role it needed a refresh.
“The RAA is a small top-up for welfare recipients in remote areas to help cover high living costs. Its boundaries date back to the early 1980s and need updating and the payment rates are overdue for a review,” he said.
“FBT was introduced to prevent remuneration ‘in kind’, such as housing, from being used to lower income tax, but sometimes, remote area tax concessions are needed to make the tax equitable.”
Overall the PC believed the current concessions were overly generous and complex.
Submissions on the findings will be accepted until 11 October and the Commission’s 319-page report can be accessed at this PS News link.
