First of all, if you’ve just been linked up with the ol’ ball and chain ‘till death do you part, we wish you a big congratulations! Please, enjoy yourselves in your honeymoon period, but when you’re back we have something to tell you.
And no, it’s got nothing to do with lecturing you about the art of compromise.
When you get married and start sharing assets, there are several tax wise implications that you must be aware of. So if you’re ready, sit down, get comfortable and let’s discuss what you need to know as a spouse for tax purposes.
Do you need to submit a joint tax return if you’re married?
Wondering if you need to file a joint spouse tax return or if you just stick to your individually lodged tax returns?
The answer is, no. All you need to do is submit your own individual tax return. If you need help with this, you should try lodging with our easy-to-use platform, and have your tax return finalised in minutes. With One Click Life, you’ll have a professional tax accountant review your return so you can be sure there’s no mistakes.
You do not need to submit a joint tax return unless you and your partner own a business together. This could create a separate legal entity called a partnership. You would need to lodge a tax return for a partnership.
Do I pay less tax if I am married?
The short answer, no. You will not pay less tax if you are married. You will have higher limits before the medicare levy surcharge applies however.
However, you can set up a family trust, which if used correctly, may be able to save you a substantial chunk of taxable money by spreading your taxable income across you and your partner or family as a whole.
Why does the ATO ask if I have a spouse when I file my Tax Return?
Even though you don’t get any direct tax offsets or increases from being married, the ATO will ask if you are married for other tax related reasons. In particular, if you are married or in a de facto relationship, the way shared assets are taxed and government levies/incentives are applied will change.
What are the tax benefits of marriage?
There aren’t many benefits of being married for tax purposes at first glance. However, if you’re clever with your money, you can significantly reduce your tax payable if you and your partner earn different levels of income.
What do I do if my partner earns more than me?
If you have shared assets and your partner earns significantly more money than you, you can make a few smart plays in order to reduce your taxable income.
The best way to show how this can be done is with an example:
Let’s say your partner earns significantly more than you, and you own a rental property together and it is positively geared (which means its profitable essentially). The income from your rental property is stacked on top of your taxable income, so if it was applied to your partners, their tax payable may increase significantly. However, if it was stacked on top of your taxable income which is comparatively low, the increased tax would usually be a lot less.
Since there is no couples tax bracket in Australia, you should look to divide income streams based on your individual tax brackets.
Tax deductions for wedding gifts in Australia
Sometimes you don’t need any gifts from your guests, so you may ask them to donate to a charity on your behalf. If this is the case, your guests can claim the gift as a tax deduction, as long as it was made to a Deductible Gift Recipient.
Capital gains tax on your primary residence
It certainly isn’t uncommon for each partner in a relationship to own their own home before deciding to live together. Under normal circumstances, you can sell your primary residence without having to pay capital gains tax.
However, if you have registered a de facto relationship or are married, you can only sell one home without paying capital gains tax.
But there’s good news, because the appreciation of the home before you entered marriage or your de facto relationship is not subject to capital gains. You are only taxed for capital gains in the period after you entered your new relationship status.
There is also the ability to move the ownership from individual to joint. If you rented it out down the track this could share the tax burden from the extra income or it could put the loss (or negatively geared property) partly in the right hands for the tax deduction.
How does tax affect same-sex couples
It shouldn’t come as any surprise, but same sex relationships are treated the exact same as any other relationship for tax purposes.
If you need help with your taxes, pop onto our website and let’s get started.
What about de facto partner tax implications
If you’ve entered and registered into a de facto relationship, the way the ATO will deal with your tax is more or less the exact same as if you were married. The way capital gains tax is calculated on your property will be the same as if you were married.
Maximising your Tax Return with an online tax agent
The best way to claim the most you can (which will maximise your money) is with One Click Life.
The more you deduct, the less tax you pay and the more money you can spend on yourself. Clearly, you will want to deduct the most you can, and the sure-fire way to do that is with OCL’s easy-to-use platform.
If you can claim OCL’s fees back on tax as a deduction too, why wouldn’t you use our platform to minimise your tax payable?
One Click Life offers online tax returns at your fingertips in an easy-to-use platform run by some of the best heads in the industry. Your tax return can be done in just 60 seconds and is overseen by one of our pros!
How easy and stress free is that?
Taxes, health insurance, and wills can be time-consuming and tedious. Our app allows you to be able to do this fuss-free, giving you a simple way to organise, track and manage all of your life admin in one place.
Let One Click Life take care of your tax return, and life’s essential tasks so you can spend more time doing the things you love.