Tax and your de facto relationship

In 2021, the Australian Census showed that for all people aged 15 years and over, 11.7% were in a de facto relationship. No two relationships are the same, so it makes sense our tax system reflects that. That’s why it’s important to know the specific requirements of lodging as a de facto couple to make sure you get the most out of your tax return.

Are you in a de facto relationship?

The Australian Taxation Office (ATO) considers a de facto relationship as one where you and your partner (of any sex):

• live together on a genuine domestic basis in a relationship as a couple,
• you and your partner aren’t legally married or in a registered relationship.

According to the tax office, there’s no minimum time period for a relationship to be classified as de facto. If your relationship fits the two points above, here’s what you need to be aware of at tax time.

READ: 5 tax tips for nurses and midwives

Your partner’s income

It’s important you tell the ATO how much your partner earns. This ensures you are paid the correct amount of family tax benefits (if applicable to your household) and helps determine if you need to pay the Medicare levy surcharge due to your combined income. You may also be entitled to:

• a rebate for your private health insurance
• the seniors and pensioners tax offset
• a Medicare levy reduction. 

Medicare Levy

The Medicare levy surcharge is paid by all Australian taxpayers who earn above a certain income ($90,000 for singles and $180,000 for families) and don’t have an appropriate level of private hospital insurance.

If applicable when completing your tax return, you’ll need to supply some information in regards to your de facto partner, including:

• your spouse’s name, date of birth and gender
• if you were in a de facto relationship for less than a full year, you need to advise on the commencement and/or end date within that current financial year
• your spouse’s income
• any trust income and family trust distributions your spouse received
• your spouse’s total reportable fringe benefits amounts (including both exempt and non-exempt amounts).
• the amount of Australian Government pensions and allowances that your spouse received, including tax-free and exempt payments (for further information see from step 4 at Spouse details - married or de facto).
• your spouse's reportable superannuation contributions (including both reportable employer superannuation contributions and deductible personal superannuation contributions).
• any foreign income earnt and details of the amounts
• child support obligations, and the amount of child support they paid
• financial investment losses, including the net financial investment loss amount
• rental property losses, including the net rental property loss amount
• any superannuation lump sum payments
• all relevant details of any income tests (see Income test questions IT1-IT8).

Save money by teaming up

Depending on your financial situation, you may save money at tax time if there’s a big difference between how much each of you earn. If you earn more than your partner, but you both have funds invested in separate high-interest savings accounts, you could pay less tax on the interest earned by moving all of your savings into a joint account and split the interest between you 50/50. 

Ask for help

If working through your tax information feels like you’re trying to learn a foreign language, you can always call a registered accountant. A reliable accountant will help you identify the right process for lodging your tax return and identify ways you may be able to save. An accountant can help you compile a solid taxation plan, and even find smart solutions for maximising your tax return in the coming year.

This article was originally published in July 2019 and updated in June 2022. Note: This information is not to be taken as taxation advice. You should always consult a registered tax advisor for all of your tax-related matters.