Filing your tax while in a de facto relationship

According to the 2021 Australian Census, just over 11% of Australians are living in a de facto relationship. When it comes to lodging as a de facto couple, it’s important to know the details that are specific to your situation to make sure you get the most out of your tax return.

Tax in a de facto relationship?

The Australian Taxation Office (ATO) considers a de facto relationship as one between two people (whether of the same or opposite sex)where they: 

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

There’s no minimum time period for a relationship to be legally classified as de facto. So, if the above definition applies to your relationship, there are a few things you should be aware of this tax time.

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Your partner’s income

If you’re living in a de facto relationship, you must let the ATO know what 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. Depending on your combined income, you may be entitled to the following:

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

Medicare levy surcharge 

You may have to pay the Medicare Levy Surcharge if you, your spouse and your dependent children don’t have a certain level of private hospital insurance and earn above a certain income ($90,000 for singles and $180,000 for families).

If applicable, when completing your tax return, you will need to supply the following information in regards to your de facto partner:

• your spouse’s name, date of birth and gender. 
• if you have been in a de facto relationship less than a full twelve months, you must advise the commencement and/or end date of your relationship within the current financial year
• your spouse’s income as listed on their previous tax return 
• income received from trust and/or 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 have paid
• financial investment losses, including the amount of the net loss
• rental property losses, including the amount of the net loss
• 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 situation, you may be able to save money at tax time if there’s a big difference between how much each of you earn. As an example, if you earn more than your partner but you both have funds in separate high-interest savings accounts, you can move your savings into a joint account and pay less tax on the interest if it’s split 50/50 between you both. 

Reach out if you need help

If going through your taxation information feels like struggling with a foreign language, reach out and ask for help from a registered taxation accountant. An experienced accountant will help you with the process of lodging your tax return for your specific situation, and identify ways you may be able to save. They can help you compile a solid tax plan and find intelligent solutions for maximising your tax return for the coming year, including the treatment of their own fees.

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