July 9, 2021

The Lover's Guide to Tax

Kate Stathis

Head of Bookkeeping

Generally we aren't fans of the Government interfering with our personal lives, but for couples across Australia there are big tax implications when you're in a serious relationship.

I love love, and I also love tax. So what better topic to write about than the tax impacts of love! Here are my top five facts about the tax consequences of a relationship. (Isn’t that what we all think about when we start falling in love?)

When am I officially in a relationship for tax?

On your tax return the ATO ask you, 'In this financial year, did you have a spouse?' The ATO define your spouse as being someone you were in a registered relationship with (e.g. married to) OR someone you live with in a genuine domestic basis in a relationship as a couple.

So, even if you aren’t married but are living together as a couple - the ATO will deem you to be spouses. The ATO can data check this against information like having combined private health insurance and the residential address you provide the ATO on your tax return.

Do we do a combined tax return?

Nope! You will both lodged your own tax returns as individuals still. Any share of joint investments, such as interest, dividends and rental properties, is recorded separately in your respective tax returns and split according to ownership (e.g. 50/50).

Why do I need to provide this info then?

Your partners income details are required as a range of tax obligations, concessions and government benefits are assessed using family income, rather than individual income.

Including your spouse's income is used to work out whether:

  • you are entitled to a rebate for your private health insurance
  • you are entitled to the seniors and pensioners tax offset
  • you are entitled to a Medicare levy reduction
  • you must pay Medicare levy surcharge

What if we both own our own house?

When moving in together you might have to make the decision - mine or yours? In this instance, you might be a couple where each individual owns a main residence that was acquired before you met. However, spouses are only entitled to one main residence exemption for capital gains tax (CGT) purposes between them. If both of you each own a main residence you must either:

  • select one residence for the exemption
  • apportion the CGT exemption between the two residences.

Provided the homes meet the requirements for the main residence exemption, they will both be wholly exempt from CGT for the period prior you being treated as spouses. However, from the time you become official spouses (move in together), only one exemption is available, although this may be divided between the two dwellings.

But don’t worry, you don’t have to make this nomination until you decide to sell. If you decide to rent the second property out, make sure to let your accountant know so they can include that income on your tax return!

Love is love

Turns out the government was on board with treating same sex couples as being in a relationship years before they called a referendum for Same Sex Marriage. Since 1 July 2009, people living in same-sex relationships have been treated in the same way as heterosexual couples for tax purposes.

In Short

There you go, next time you think about moving in with that fling from Tinder after dating for two months, have a think about whether or not you’re willing to call them a spouse. ;)

If you have any questions about joint investments, getting married, and whether or not you need to declare your partners income on your tax return - hit us up!


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