When you are filing your taxes, one of the most important things to consider is whether or not you need to declare your partner’s income. In Australia, there are specific rules and regulations that dictate when you are required to disclose this information. In this blog post, we will discuss these rules in detail and help you determine if you need to report your partner’s income on your tax return.
Who Qualifies as A Partner?
According to the ATO, your spouse includes another person (of any sex) who:
- You were in a relationship with that was registered under a prescribed state or territory law
- Although not legally married to you, lived with you on a genuine domestic basis in a relationship as a couple.
In essence, according to the ATO, your spouse does not just refer to your husband or wife, but to anyone who lives with you in a genuine domestic relationship. You are required to make a declaration whether you share your finances with your partner or not.
You will need to also include details of a partner that lived with you for a while. In such cases, you have to indicate the start and end date of such relationships.
Key Information Needed about Your Spouse
For tax purposes, there are three key pieces of information that you will need to include about your spouse. These are:
• Their full name
• Their date of birth
• Their Tax File Number (TFN).
The ATO needs as much information as possible and as such, additionally, you will need to provide the following:
- The PAYG payment summary or income statement from your spouse
- In case of child support obligations, provide details of the amount paid
- Foreign income received
- Net profit/ loss from any financial investment profit/losses
- Net profit/loss from any rental property profit/loss
In case of a claimed deduction for superannuation contributions, provide details of the amount claimed
If, for whatever reason, you are not able to access the information, try and give an estimate that is accurate. The ATO has stated, time and again, that they do not penalize anyone for inaccurate estimates.
Does This Amount to a Joint Tax Return?
Providing information about your spouse’s income can be quite confusing for most taxpayers and many believe that it amounts to filing a joint tax return. However, this is not the case as you are still required to file your own individual tax return and provide information about your spouse’s income in a separate section.
In addition, any assets or liabilities that you may have shared with your partner will need to be declared separately. This will ensure that you are able to get the maximum benefit from any deductions and offsets that may be available to you.
Why Declaring Your Partner’s Income Is Important
There are benefits to including your partner’s income in your tax return. The ATO uses the information to determine if:
- you are entitled to a rebate for your private health insurance
- you are entitled to the seniors’ and pensioners’ tax offset
- you are entitled to a Medicare levy reduction
- you must pay the Medicare levy surcharge
It is advisable to seek professional help so as to provide the right information to the tax authority.
In conclusion, if you are in a genuine domestic relationship with another person, then you will need to declare their income on your tax return. It is important to provide accurate information about them. At Accurate Business & Accounting Services we can help you file your tax return and declare that of your partner accurately. Talk to us today for more information.