Ausprop is explaining it incorrectly, but the net effect is as described.
They do not add it back twice.
But what they do with their starting point calculations creates the anomaly.
Centrelink don't see a negative income. For the purposes of calculating eligibility for various payments, they take your taxable income as a starting point. Anything less than zero is just called zero. It is at this point any losses from rental property are added back on.
So if you earn 100000 but have 50000 real estate investment loss, your taxable income is 50000, but for purposes of calculating benefits, it will be 100000 (50000 added back on).
But if you earn 50000 and have a 100000 real estate investment loss, your taxable income will be -50000 (which can be carried forward and offest against future income. BUT Centrelink/FAO will take that -50000, call it zero (anything negative is just treated as zero). THEN they add back the real estate investment loss. So, for the purpose of calculating benefits, they say your "adjusted" income is 100000. Worst case scenario is having zero income. Taxable income = -100000, they zero this, then add the 100000 loss on to this.
Doesn't make sense? Seems stupid? That's the point...
This anomaly only exists if you have taxable income is actually a loss...
If this explanation is correct, it would be a sad reflection of the state of public service and an environment of investor bashing in Canberra.
It used to be:
Base FTB on family criteria and taxable income only
Then with the use of negative gearing, to negate negative gearing effect:
= normal declared taxable income + negative gearing claimed.
If the negative gearing comes from the same source of declared income, the negative gearing would be added twice. I THINK THIS IS INCORRECT APPLICATION OF FTB RULES OR THE ACCOUNTANT HAS PUT THE FIGURES INCORRECTLY IN THE TAX RETURNS. (Bill is right.)
Auspro: I would appeal to Centrelink regardless of the disagreements of workers united in this forum. You pay tax and has the right of equal treatment and support. You may be assets rich but cashflow poor, eg own a big family house/farm and have no income, Australia has not come to the stage of forcing people to sell everything to be entitled to help (there are already threshold limits on assets). Let the pollies sort this out at the ballot box but in the meantime, I would go along with the system.