Rental income of negatively geared property for FTB purpose

Discussion in 'Accounting and Tax' started by Fisher, 28th Apr, 2014.

  1. Fisher

    Fisher Member

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    Hi,

    Me and my wife have our own PPOR and an investment unit generating around $460 per week. It is negatively geared though, so we don't see any income from it. Does this income count when we apply for FTB? My wife doesn't work attending to our newborn, so I thought about applying for FTB, but not sure about the rental income thing.

    Thanks.
     
  2. dan c

    dan c Member

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    The loss on the rental property is added back to your taxable income.

    The formula for FTB is taxable income plus net investment losses plus salary sacrificed superannuation plus adjusted fringe benefits. You also need to add some tax free pension if applicable.
     
  3. Fisher

    Fisher Member

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    Sorry, I did not quite understand, what it means: "added back to your taxable income".

    Lets say my income is 80k, my loss is 5k. Do I declare the rent income when claiming FTB?
     
  4. CHAOS

    CHAOS Member

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    Hi Fisher

    For FTB purposes your income would be 85k. (80k plus 5k loss)
     
  5. Paul@PFI

    Paul@PFI Tax, SMSF & Planning

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    The ATO shares your income details with Centrelink and other agencies when you lodge. Centrelink then compares what they actually paid you v's what your entitelement is. If its under they pay you. If its over you owe them.

    Some claim it at year end and others self assess low and others try to self assess accurately. You can amend at any time by calling Centrelink
     
  6. Bantam Roosta

    Bantam Roosta Member

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    As far as I understand, you would declare $80k for FTB purposes.

    $80k income, minus $5k losses, equals $75k taxable income on your tax return.

    For FTB purposes, take your taxable income ($75k) and add total net investment losses ($5k) and you have $80k.

    BR
     
  7. dan c

    dan c Member

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    Lets say you have salary of $80k, deductions of $3k, and a rental loss of $5k.

    Your taxable income would be $72k ($80k - ($3k + $5k))

    Adjusted taxable income is taxable income plus rental loss.

    = $72k + $5k
    = $77k
     
  8. Paul@PFI

    Paul@PFI Tax, SMSF & Planning

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    No. FTB is based on "adjusted taxable income" !!

    The following amounts are used to calculate a person's ATI:
    * taxable income
    * reportable employer superannuation contributions
    * deductible personal superannuation contributions
    * adjusted fringe benefits (total reportable fringe benefits amounts multiplied by 0.535)
    * certain tax-free government pensions or benefits received by the person
    * target foreign income (income and certain other amounts from sources outside Australia not included in your taxable income or received as a fringe benefit)
    * net financial investment loss (the amount by which the person's deductions attributable to financial investments exceeded their total financial investment income)
    * net rental property loss (the amount by which the person's deductions attributable to rental property exceeded their rental property income)
    * any child support payments the person provided to another person

    Relying on opinions can be dangerous.
     
  9. Paul@PFI

    Paul@PFI Tax, SMSF & Planning

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    Further thought on adjusted taxable income....

    Its used for Medicare Levy surcharge, HELP repayments. child care benefit, parental child support calculations, Div 93 super contributions tax, co-contributions, paid parental leave scheme and more. Likely to also be the basis for any income levy proposed for the May budget too.

    If I were a betting man I would also expect it be expanded in budget so that personal tax deuctible super contributions may be added to this list. Many older self funded retirees make super contributions that lower taxable income and bypass income tests.

    Lesson with ATI is tax losses wont "change" income and result in windfalls. The Govt has aligned ATO well over past 10 years to ensure that loopholes are diminished / eliminated.
     
  10. Bantam Roosta

    Bantam Roosta Member

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    I'm pretty sure we agree. I didn't list the entire number of things that affect it, but assuming a -ve gearing loss was the only other event other than the wage, then my example would stand.

    BR