The 2015 financial year will be the last year in which “Fly-In-Fly-Out” or “Drive-In-Drive-Out” employees can claim the Zone Tax Offset if changes proposed by the federal government are adopted. This means there will be no more zone tax offset for FIFO workers!
Under the current law, taxpayers are entitled to claim the offset if they spend at least 183 days of the year in a zone. Those 183 days didn’t need to be continuous, so most FIFO or DIDO employees who worked for a full year would easily meet the requirements. Under the proposed law the offset would be limited to those taxpayers whose normal place of residence is located within a zone, and they have resided there for at least 183 days of the year.
The Government’s reason for the change is that it [FIFO and DIDO employees claiming the offset] is inconsistent with the original intention of the offset, which was to compensate for the difficulties in living in a remote area. Many FIFO workers do not face the same challenges as those who live in a remote area.
Of course, working FIFO or DIDO comes with its own set of challenges that residents of a remote area might not face. I don’t believe the Government has considered the high tolls and psychological effects felt by FIFO and DIDO workers. Or if they have considered it, they don’t think it’s worth a tax break anymore.
The horse has bolted…and made it over the horizon
Most FIFO employees received a tax benefit of between $300 and $1,900 per year while they were eligible for the Zone Tax Offset. Depending on how long an employee has worked as FIFO, the location they work in, and their roster they may have already received significant and measurable tax benefits under the current law.
Why introduce this measure now as the mining boom winds down and the number of FIFO employees begin to decline? Why not introduce it in say 2008? According to the original budget paper released in May 2015 the Government expects this measure to save $325 million over the next three years.
Are these savings really ‘new’ savings though? The Government would eventually make the same savings if the rate of FIFO workers decline (and became ineligible under the current law). If that’s the case, they’ve merely brought forward savings from future years.
For those FIFO and DIDO workers who have claimed the Zone Tax Offset previously, that money is yours to keep. The ATO won’t be asking for it back. They just won’t be giving it out in future.