Total Net Investment Losses for family assistance and Paid Parental Leave scheme payments 007-07080040

This is the amount (if any) by which the customer's deductions for the income year that are attributable to:

• financial investments exceed the customer's gross income for that year for those investments and
• rental property exceed the customer's gross income for that year from rental property

If a person's taxable income is less than zero (a loss), it is counted as nil before adding the Total Net Investment Loss.

A customer cannot offset income from financial investment against a loss from a rental property and vice versa. However, if the customer has multiple financial investments or multiple rental properties, they can offset income from one investment or property against a loss from another investment or property.

Resources contains examples.

If the customer receives a profit from a financial investment or rental property, the amount should be included in their estimate of taxable income.

If a customer and/or their partner has a financial investment, they will have a net financial investment loss if the expenses in relation to the financial investment are greater than the income.

The amount of a net financial investment loss is as assessed by the Australian Taxation Office (ATO). People with these types of losses are able to reduce their taxable income assessed by the ATO by the amount of the loss. For Family Assistance and Parental Leave pay purposes, these losses are added back to the person’s income as part of their Adjusted Taxable Income.

The Total Net Investment Losses component is made up of the existing Net Rental Property Losses component and losses from financial investments.

Financial investments that will be considered for family assistance purposes may include investments in shares, term deposits or managed funds. Consequently, examples of a 'net financial investment loss' may include the following:

• Borrowing costs (interest expenses, establishment fees, legal expenses, stamp duty) on a loan that is taken out to invest in shares where those borrowing costs exceed the return on the shares
• Management or fund fees, including ongoing trailing commissions associated with a share investment or managed fund investment where those fees exceed any return on the investment
• Travel expenses or the costs of an industry publication concerning investment or investment strategies. Individuals may claim the costs of travel to meetings with a share broker or the costs of an industry publication relied on in managing a share portfolio as an allowable deduction provided the necessary connection with the earning of income from the investments is established. Where such expenses exceed the investment return, then it is likely the individual will be deemed to have incurred a 'net financial investment loss'

If a customer and/or their partner has a rental property, they will have a net rental property loss if their expenses in relation to the property are greater than the income for the property.

The individual's share of the partnership net investment loss that is included in the personal income tax return is included in the customer's adjusted taxable income. Net investment loss made by a trust is not included in the customer's adjusted taxable income.

If the customer is required to lodge a tax return, the ATO will advise the net investment loss amount as part of their actual adjusted taxable income which is used to reconcile their FTB/CCS after the end of the financial year.

For 2008-09 and earlier financial years, NRPLs were included in ATI used for family assistance. This did not include losses from financial investments.

Customers only had an NRPL if they received income from real estate and their expenses in relation to the property were greater than the income.

The NRPL amount is assessed by the Australian Taxation Office (ATO). People with NRPLs can reduce their taxable income assessed by the ATO by the amount of the loss. For family assistance, the amount of the loss is recorded separately and is added to their taxable income to work out their ATI.

If a person's taxable income was less than zero (a loss), it was counted as nil before adding the NRPL.

If a customer had more than one rental property, the losses and/or profits needed to be added together to work out the overall loss or profit.

If the customer received a profit from the property, the amount should be included in their estimate of taxable income.

If the NRPL was included in the income tax return for:

• a partnership or trust, it was not included in the customer's ATI
• an individual (in relation to a partnership), it was included in the customer's ATI