Negative Gearing excluded from other Tax Programs

Total net investment losses, where the amount of allowable deductions of an investment exceeds the amount of income received from the investment, are applied against other income to determine “Taxable Income”. Taxation benefits are obtained from a net investment loss based on a taxpayer’s marginal rate of tax.

Changes relating to net investment losses to apply from 1 July 2009, while not affecting its impact on “Taxable Income”, will affect income tests for other government measures. From this date, net investment losses will be added back to income to work out whether a taxpayer meets the income tests for the following tax programs:

  • Medicare levy surcharge
  • Higher Education Loan Programme and Student Financial Supplement Schemedebts
  • Dependency tax offsets
  • Senior Australians tax offset

The following types of net investment losses are taken into account:

  • Rental property investments
  • Shares
  • Managed investment schemes
  • Forestry managed investment schemes
  • A right or option in respect of any of the above
For details on how "adjusted taxable income" is used for other government benefits ==> Adjusted Taxable Income

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