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The Nitty Gritty Tax Implications Of Marriage

Marriage brings a whole new set of tax implications, so here is what the experts from H&R Block think all Aussie couples need to know!

Marriage is a huge milestone in every person’s life and tax is probably the last thing a couple considers when planning their big day. However, there are some things you need to know about taxes in Australia and their implications which concern many aspects of your marriage including insurance, property, changing your surname and even wedding gifts in some cases.

Established in 1971, H&R Block is the leading tax preparation company in Australia handling over 700,000 returns annually. Tax Communications Director, Mark Chapman has shared with us his tips for newly-weds and future brides and grooms. He says that there are a number of “tax misconceptions” that apply to married Australian couples. “For instance, you don’t have to lodge a combined tax return if you’re married and joint income is recorded separately in each spouse’s tax returns”, he says. “Married couples also need to show on their tax returns that they now have a spouse, and disclose his or her taxable income for the year”.

Here is what else you need to know about marriage and taxes in Australia:

Private Insurance

Chapman stresses that “your combined income is taken into account if you don’t have private health insurance”. He says that in these cases, “you may have to pay the Medicare levy surcharge – effectively an additional 1.5 % tax – if you are a high earning couple as well as when calculating Family Assistance Office benefits such as family tax benefits”.

Changing Names

If you wish to change your surname, the details should be updated before your tax return is lodged. “The easiest way to do this is online or by phone”, says Chapman. “You’ll need to verify your identity with the ATO when you do it, so you’ll need documents such as your birth certificate or marriage certificate”. He adds that you can no longer notify the tax office by simply by noting it on the front cover of your next return which was previously the case. Read our article on changing your last name.

Wedding Gifts

Some couples prefer to ask their guests to donate money to a charity instead of purchasing traditional wedding gifts. In this case, your guests can claim a tax deduction for the gift provided to a charity registered as a Deductible Gift Recipient. You can find more information on this via: www.abr.business.gov.au.

Real Estate

Perhaps both of you already have your own home before you decided to get married and now you want to live together? Chapman says that “spouses are only entitled to one main residence exemption for CGT (Capital Gains Tax) purposes between them. If both members of a couple each own a main residence, they must either select one residence for the exemption or apportion the CGT exemption between the two residences”. Maybe you are wondering what the definition of spouse is? The term applies to both registered relationships and de facto relationships, and a ‘spouse’ can be a person of the same sex or opposite sex because same-sex relationships are now treated in the same way as heterosexual relationships.

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