3.9.3.37 Total Net Investment Loss - Net Financial Investment Loss

Summary

This topic contains information on the concept and assessment of net financial investment loss, which is the first of 2 components that make up a person's total net investment loss. The second component is net rental property loss (refer to 3.9.3.38).

Act reference: SSAct section 1071 Seniors Health Card Taxable Income Test Calculator, section 1071-3 Adjusted taxable income

Policy reference: SS Guide 3.9.3.40 Treatment of Income Components for CSHC, 3.9.3.38 Total Net Investment Loss - Net Rental Property Loss

Assessing investment losses

In relation to a financial investment loss, the total net investment loss is the amount by which allowable deductions in respect of the particular financial investments exceed gross income from those investments.

Example: The net financial investment loss is the amount by which deductible interest expenses on a loan taken out to buy shares exceeds the dividend and other income from those shares.

In determining an individual's net financial investment loss amount, the deductions must be those allowed by the ATO. This may include expenses such as the costs of borrowing to invest in the financial investment or managed fees charged on the investment.

Losses do not relate to changes in share value through share price movements.

A net financial investment loss declared as a loss by a partnership or trust is NOT to be added back in the assessment of income for CSHC even where it is declared to the ATO on a person's income tax return.

Assessing net financial investment loss - members of a couple

A person and their partner's individual income must be calculated separately, before being combined.

Determining if an estimate is reasonable

In 2009-10 a person may only use an estimate of their total net investment loss.

From the 2009-10 financial year a person's total net investment loss will appear on their TNA.

Factors to be considered when deciding whether use of an estimate is reasonable are:

  • whether the person's explanation of how they calculated the estimate is consistent with the estimated amount, and
  • the reason for the change in income.

Act reference: SSAct section 1071 Seniors Health Card Taxable Income Test Calculator

Policy reference: SS Guide 3.9.3.30 Assessment of income for CSHC

Last reviewed: 1 July 2015