How Does Getting Married Affect My Tax?

Hi Scott

We are getting married in June 2018. Planning ahead, I’d like to know what tax implications there are after we get hitched. We are both 27, I earn $64,000 p.a. and he earns $74,000 p.a. We currently keep our finances separate and plan to do so until the marriage (though we have joint savings for the wedding, which will be spent!).

Kelly

Hi Kelly

Congratulations. You are the first bride-to-be to ever put ‘tax planning’ on their to-do list.

Bridesmaids’ dresses? Check. Flowers? Check. Tax implications of nuptials? … Email the Barefoot Investor.

Then again, you’re talking to a guy who times his Barefoot Date Nights to coincide with the monthly Reserve Bank meeting.

HOT!

Okay, so the big change is an administrative one: once you’re married, you’ll need to record on your tax return that you have a spouse, and include his taxable income. (And your spouse will have to do the same on his tax return.)

Why?

Well, it’s part of a reality show the ATO is pitching as a rival to The Bachelor (“You told me you earned $200k!!”)

Okay, so that’s not true. In reality, the ATO needs your spouse’s income to work out if they can slug you with extra tax (couples without private health insurance that earn over $180k combined will be hit with a 1% Medicare Levy Surcharge, rising to 1.5% for couples earning over $280,000), and also to work out any family tax benefits.

(Interesting factoid: even though our pollies are spending $122 million on a postal vote to decide on same-sex marriage, the bean-counters at the ATO are much more liberal: they define a spouse as being either a registered partner or a de facto, so you may be doing this already.)

There are a few other implications:The Good: you can split your (non-salary) income with your spouse, so always invest in the lower-earning spouse’s name.

The Bad: if you both own a home, you have to choose (or apportion) which one gets the capital gains tax (CGT) exemption. Talk to your accountant to crunch the numbers if you’re in this situation.

The Ugly: watch Seven Year Switch on Channel 7.

Congratulations!

Scott