The tax implications of marriage probably aren’t the first thing on your minds as newlyweds. Don’t fret, like you, many have not given given any thought to the potentially important tax consequences of their new married status.
It is not unusual for each half of a couple to own to own their own home before they married. Normally, you can sell your main residence without CGT. However, spouses are only entitled to one main residence exemption for capital gains tax (CGT) purposes between them. If both members of a couple each own a main residence they must either:
Provided the homes meet the requirements for the main residence exemption, they will both be wholly exempt from CGT for the period prior to the couple being treated as spouses. However, from the time the couple get married, they can only have one exemption, although this may be divided between the two dwellings.
Will you be setting up a joint bank account to start your life together? The ATO will typically assume a 50/50 split of the interest earned on the joint bank account and add it to each partner’s taxable income accordingly. If, however, you can prove only one partner really benefited from the account, you may be able to assign interest income to them.
Because you’re legally identified as a spouse there are a couple of changes you’ll need to make when you next file your taxes. There’s the easy stuff, like ticking the box that says you have a spouse and updating your details if you’ve changed your name. Unlike some countries where you can lodge a ‘family return’, in Australia each partner is required lodge an individual tax return.
Both partners in the couple need to alert the ATO when they’ve become a spouse and what their income and assets are. This will help the ATO calculate your eligibility for various entitlements and offsets. This includes the Superannuation Spouse contribution and the Private Health Insurance rebate. You’ll still be able to consider any assets brought into the marriage, like shares for example, as individual assets.