For a resident taxpayer, where the sum of taxable income or loss and the net loss amounts that exceed or equal zero, the reported income for the non-commercial losses income test is equal to $250,000 or more. Ensure loss codes used and/or amounts reported at the relevant labels are correct. A copy of the formula used to calculate income for this test can be found at www.ato.gov.au/nc.
Note: The following information is of a general nature. Contact the ATO for advice specific to your client's circumstances.
To first be eligible, the sum of all four elements must be less than 250,000. For element one, taxable income is not the calculated taxable income on the form, as the calculation requires the addition back of business losses.
Element 1
Your taxable income is your assessable income less your allowable deductions for an income year. For the purposes of the income requirement, any assessable:
business losses are added back to your taxable income if they were already included in the calculation of your taxable income.
assessable FHSS released amount is subtracted from your taxable income if it was already included in the calculation of your taxable income.
Element 2
Reportable Fringe benefits.
Element 3
Reportable Employer superannuation contributions.
Element 4
Your total net investment loss is the sum of your net investment losses from the following two types of investments:
rental property investments, such as negatively geared rental properties (IT6).
financial investments, such as negatively geared share portfolios (IT5).
Add the total from each element 1, 2, 3, and 4 together to find if your client meets the income requirement to offset the loss. If the total exceeds 250,000, then your client is not eligible, and the error IITR.100031 will appear as per the ATO SBR specification.