Love and Taxes

June 15, 2009, 7:00 amwomenshealth

Just married? How to do tax - à deux

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So, you're newly hitched or in de facto bliss. Until now, your taxes have been hassle free. But now your status has thrown a big spanner in your tax return. Luckily, this is one thing marriage doesn't make more complicated. "Unlike the US, married people in Australia still file individual returns," says Michelle Pearce, director of Face Chartered Accountants. "It's good to do them together, though - with an accountant or using e-tax." Read on for more wise advice...

Check your joint bank accounts


You'll need to cross check your balances and interest earned, says Pearce. "And in the case of both of you working from home (or partially working from home), you'll need to make sure you're not both claiming all of the bills and rent; you need to split them up," she explains. Same goes for joint shares or income earned on any property you're renting out.

Give the bigger earner the biggest deductions


So, who brings home the biggest slab of bacon? Well, that partner faces higher tax rates on their earned income, so they are likely to benefit more from the break a bigger deduction offers. Again, just make sure you don't both claim any of the deductions. PS: this trick won't work for charitable donations - the name of the donor is on the receipt.

Invest in the lower income earner's name


You'll get taxed less. But there is a pitfall, warns ANZ financial advisor Katrina Pulbrook. "What happens if the lower earner suddenly starts to earn a higher salary, or comes across a windfall (like an inheritance) that pushes their tax bracket up? Changing assets over to the other person can be costly and may cause a capital gain ending up with additional tax," she says.

Always disclose your partner's name


Be honest when applying for a family tax benefit. Many government benefits are means tested against your joint income, says Pearce. "I've seen married couples with different surnames not disclose they're married; the wife says she has kids, and she gets a big benefit because only her income is taken into account. But she's found out and has to pay the money back." Ouch.

Think about a spousal rebate


Imagine you're a high-income earner and your partner doesn't work, but you don't get a family tax benefit, either because you earn too much or you don't have children. You can claim a "Dependant Spouse rebate", (which increased in the last financial year) because you're supporting your mate. Yes, sometimes the ATO really is there to help.

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