De-Facto Tax Australia – All You Need to Know

1. De-Facto Tax Australia – All You Need to Know Safe & Secure In Australia, a de facto relationship is defined as a couple living together on a genuine domestic basis in a relationship, without being legally married or in a registered relationship. If you are in a de facto relationship, you must declare your partner on your de-facto tax return. www.taxly.ai

2. Tax Obligations for De Facto Couples As a de facto couple, your income is assessed jointly and referred to as “family income” Partner’s Financial Details Required for De-Facto Tax • You’ll need to report various financial details about your partner, such as: • Taxable Income • Trust Distributions • Reportable Fringe Benefits • Pensions and Allowances • Reportable Super Contributions • Foreign Income www.taxly.ai

3. Implications of De Facto Tax Changes Tax changes in a de facto relationship can have both positive and negative impacts: Medicare Levy Surcharge: If your ‘family income’ crosses the Medicare Levy Surcharge threshold, you may need to pay the surcharge. Private Health Cover Rebate: If your family income falls within a specific range and you have private health cover, you may be eligible for a rebate, which can be applied as a premium discount or claimed on your tax return. www.taxly.ai

4. De-Facto Tax and Property Ownership CGT is a levy on the increase in property value between purchase and sale dates. Determine your Main Residence: Decide which property serves as the main residence, eligible for CGT exemptions. De-Facto Tax CGT Exemption Requirements: • It must have been your primary residence during the ownership period • It must not used for income generation • It should be situated on less than two hectares of land. www.taxly.ai

5. History of De Facto Tax in Australia The history of Australia’s tax system dates back to the Second World War when fundamental changes were made to the taxation system. Income taxation was consolidated by the federal government in 1942. At the time of Federation, Australia’s tax to GDP ratio was around 5%, and this ratio remained reasonably constant until the introduction of the federal income tax in 1915, which was used to fund Australia’s war effort. Tax revenues tended to fall in the middle of the twentieth century, and by 1963-64, the tax take was around 18% of GDP. www.taxly.ai

6. When declaring for de facto, you will need to answer the following questions: • What is your spouse’s name, date of birth, and gender? • What is your relationship status (married or de facto)? • If you were not in a de facto relationship for a full year, what were the commencement and/or end date within the current financial year? • What is your spouse’s income? • What is the amount of Australian Government pensions and allowances that your spouse received, including tax-free and exempt payments? www.taxly.ai

7. The Bottomline De facto tax in Australia is applicable on de facto relationships. You must declare your partner on your tax return, and your income is assessed jointly as “family income”. The Australian Taxation Office (ATO) uses your joint income to calculate tax offsets you may be entitled to receive. www.taxly.ai

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