Getting married can be a very exciting time in your life, but buried deep below the excitement of popping the question, testing out cakes and choosing a honeymoon location is the technical, read: financial, side of things.
Our Director Ian (married for quite a few years – so he knows his stuff) gives us the lowdown on taxes after saying I do.
“You don’t haveto lodge a combined tax return if you’re married, and joint income is recorded separately in each spouse’s tax returns. However, married couples need to show on their tax returns that they now have a spouse, and disclose his or her taxable income for the year”, he says.
“You’ll need to notify the Australian Tax Office if you change your name, before you lodge a tax return.”
Ian offers a word of warning – once you get married, your insurance is based on a combined income, so don’t be fooled into thinking you’ll get away with the same breaks as before.
“Your combined income is considered if you don’t have private health insurance. In these instances, you may have to pay the Medicare levy surcharge – effectively an additional 1.5% tax – if you are a high earning couple as well as when calculating Family Assistance Office benefits such as family tax benefits,” he says.
When it comes to property (a pretty hot topic right now!) Ian reveals there is a lot to consider, as different tax rules apply before and after getting hitched.
If you do own your own home prior to tying the knot, Ian has the following advice for you: “Normally, you can sell your main residence without having to pay CGT (Capital Gains Tax). However, spouses are only entitled to one main residence exemption for CGT purposes between them,” he says.
But what if we both own a property, you ask?
“If both members of a couple each own a main residence, they must either select one residence for the exemption or apportion the CGT exemption between the two residences. 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 legally treated as spouses. From the time the couple gets married, they can only have one exemption, although this may be divided between the two properties.”
Looking to tie the knot but looking to revaluate your finances? Give the experts at Moore Lewis & Partners a call today!