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1.1.T.105 Total net investment loss (YA)

Definition

For the purposes of YA, a total net investment loss has the same meaning as in the Income Tax Assessment Act 1997. It is the sum of the total net investment losses of each parent of the claimant/recipient in the appropriate tax year.

The ATO allows net investment loss as a deduction from assessable income in deriving a person's taxable income. For YA parental income test purposes, the value of the net investment loss is added to the combined parental income for the purposes of the YA parental income test (1.1.P.40).

Assessing net investment loss

If a parent has a tax deduction because of a net investment loss, to calculate the amount of assessable income, the net investment losses are added to the parent's other assessable income.

Example: A parent provides the following details of their income:

Details $
Income from wages 80,000
Investment income 20,000
Investment costs −35,000
NET INVESTMENT LOSS (tax deduction)
($20,000 − $35,000)		 −15,000
TAXABLE INCOME
($80,000 − $15,000)		 65,000
ASSESSABLE INCOME (taxable income plus investment loss)
($65,000 + $15,000)		 80,000

The taxable income is $65,000, to which is added the net investment losses of $15,000, giving an income of $80,000.

Assessing net investment loss - negative income

If a parent has a tax loss because of a net investment loss, their taxable income is zero. To calculate the amount of assessable income, the net investment losses are added to the parent's other assessable income.

Example: A parent provides the following estimate of their income:

Details $
Income from wages 10,000
Investment income 20,000
TOTAL INCOME 30,000
Investment costs −35,000
NET INVESTMENT LOSS (tax deduction)
($20,000 − $35,000)		 −15,000
TAXABLE INCOME 0
TAX LOSS −5,000
ASSESSABLE INCOME 15,000

The taxable income is zero, to which is added the net investment losses of $15,000, giving an income of $15,000.

Note: For the purposes of YA, taxable income must be a positive figure or $0. It cannot be a negative figure.

Act reference: SSAct section 1067G-F1 Parental income test result, section 1067G-F10 Combined parental income

Income Tax Assessment Act 1997 section 4-15 How to work out your taxable income

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