Tax Guide For Couples: How does having a spouse affect your tax return?

Estimated reading time: 5 minutes

This tax guide for couples helps you determine whether you need to include your partner’s information on your next tax return. Read on to learn what you should tell the Australian Taxation Office (ATO) this year…

Who the ATO defines as a spouse for tax purposes is a common cause of confusion. Once you’re familiar with the definitions, you can determine what, if any, extra information you need to enter on your tax return this year.

What is a spouse for tax purposes in Australia?

The answer to this question determines if you need to include their tax information on your tax return.

For tax purposes, the ATO’s definition of a spouse or de facto partner is not just someone who is legally married.

For a person (of either sex) to be considered your spouse or de facto partner, there are two questions you need to answer “yes” to:

1. Are you in a relationship?
2. Do you live with that person as a couple in a domestic relationship?

If you answer yes to both questions, that person is your spouse or de facto for tax purposes. This means you need to include some of their details on your tax return.

In addition, if you are married, your partner is automatically considered to be your spouse for tax purposes.

Does the ATO recognise same-sex partners?

In Australian tax rules, it doesn’t matter what gender you or your partner are, the definitions of spouse and de facto partner apply equally to everyone. It’s based solely on the nature of your relationship, and the ATO pays no attention to sex or gender.

How does having a spouse affect your tax obligations?

In Australia, there is one tax return per person; there is no such thing as a joint tax return or couples’ tax return.

However, if you have a spouse or de facto partner, you must each include some of their tax information on your return.

This includes:

• Salary and wage income
• Dividends
• Interest income
• Rental income
• Foreign income
• Child support payments made by either spouse on both returns (if applicable)

How does having a spouse affect my tax refund?

Once you have a spouse, the ATO uses your combined income to calculate key thresholds for items such as the Medicare Levy, Private Health Rebates, Family Tax Benefits and Childcare payments.

Here’s an example:

• Julie and Mark start a relationship and move in together.
• Julie earns $110,000 per year and Mark earns $70,000.
• Neither has private hospital cover.
• Previously, because Julie’s income was above $101,000 she had to pay $1,100 of Medicare Levy Surcharge on her tax return.
• However, now that she has a spouse, we use Julie and Mark’s combined income of $180,000. As it’s below $202,000, Julie no longer has to pay any Medicare Levy Surcharge and her refund increases by $1,100.

What happens if you leave your spouse off your tax return?

Many people think they can just “skip” adding their spouse to their tax return. This is a big mistake, as the ATO uses data matching techniques to detect when a spouse is missing from someone’s tax return.

If you don’t fill out your spouse’s details, the ATO could amend your tax return and even issue financial penalties for incorrect lodgements.

It’s important to ensure you‘re both aware of the tax obligations that come with being in a relationship, fortunately in Australia it’s rather simple. You just have to answer a few extra questions on your tax return.

If you’re not sure whether you need to include your partner on your tax return, just ask Etax! Our team of expert accountants can quickly determine your obligations and help ensure your tax return is right.

Frequently asked questions