Tax Planning Strategy 169 | Salary Packaging Rental & Share Investment Losses to ‘Beat’ the Income Test Rules

Investment Loss (TNIL) is an individual’s taxable losses from rental and share investments. The TNIL is added back to an individual’s taxable income to calculate the tax related concessions and obligations for:

• Medicare levy surcharge.
• 15% additional tax on concessional contributions (Division 293).
• Child support payments.
• $1,000 up-front reduction for discounts on employee shares/options.
• Senior and Pensioners Tax Offset

A TNIL can be reduced where an employee salary packages deductible rental property and share investment expenses through their employer. This involves the employer reimbursing the employee for those expenses while reducing the employee’s gross wages to cover the cost. The benefits of this are:

• Employee’s TNIL is reduced.
• Reimbursed expenses are not reported on employee’s payment summary (as not subject to FBT under the ‘otherwise deductible rule’). 
• No FBT payable by the employer (under the ‘otherwise deductible rule’). 
• Employee salary packages GST-exclusive cost of expenses so getting the GST refunded on the expenses (as employer can claim the GST input tax credit in relation to the reimbursed expenses).

  Reducing the individuals TNIL reduces their adjusted taxable income for the purpose of calculating any child support payments. See Human Services.