Tax Question - Are single income families being penalised financially?

Hi all,
Just trying to gauge everyone's experience before deciding to go to a tax accountant
We are a family of 4 (2 kids). Wife is not working to look after kids. I am the only one working presently
Had a casual chat with wife's friend a few weeks ago. They are family of 3 (1 child). Difference is, they're both working parents.
We went into discussion around tax and income and what we found out was that despite their combined income being less than mine, my take home pay is lesser than them.
ie they are both ~$80-100k income each whereas I am on ~$200k.
We had a laugh initially but thinking about it, their work hours are significantly lower than mine. I work for a bank and needless to say, the extremely long hours, probably longer than them both combined to be frank to get a good bonus.
Am I missing something here when it comes to tax return? I dont mind going to a tax accountant if this is a complex matter, but with my limited knowledge i thought my tax return would be pretty straight forward too as there arent any complex holding structures etc.
I would have thought a fair tax system would look at combined income for a family and apply the tax bracket accordingly?
Thanks!

EDIT
Thanks guys for all the responses - I guess my key takeaway is there are ways to optimise our tax positions so we will look into this.

But just to play back a few scenarios that really struck me and got me thinking

Sc1: Person 1 works 8 hours, gets $100k, pays fair share of tax
Sc2: Person 2 works 16hours, gets $200k, pays more (but fair share) tax. Absolutely silly some would put. Thats not our way of living they say, so you deserve to pay more tax. I get it that this is the same worldwide.
Sc3: Person 1 and 2 gets married, Person 1 takes a career break after having kids. Well mate, you are working too hard, get your partner to start working again to get better tax treatment. At the same time, you go get a lower paying job if you dont want to pay tax (huh what?)
Sc4: Person 3 and 4 are also married, earning the same as Person 2. Oh come on OP, person 3 and 4 are hardworking so they deserve better tax treatment than Person 1 and 2! Get on with life.
Sc5: Person 2 asks if he was missing anything in tax return. Didnt make sense (to him) that dual earner earning the same income as single earner is paying less tax. Oh OP, you are such an entitled, selfish person, who cant comprehend that you are asking for a better tax treatment putting others at risk of subsidising your partners living. Its your fault for working 16hrs and you deserve to pay more tax. Your partner is not working so your family deserves worse tax treatment. Dont get those that work normal hours to pay for your partners time at home watching TV.
Sc6: Person 2 asks, what happens hypothetically if Person 1 is no longer able to work. Does that change the argument? No one gave an answer. This is not the scenario for Person 1/2, but there are families like that in Australia.

Comments

  • +85

    No - tax looks at the income of an individual, not a family.

    • +55

      Tax accountant here. Whilst this is true, some countries like the US consider the family income when assessing whereas Australia considers on an individual basis. In our system this does penalise single income families when considering only the take home pay amount.

      There are a lot of other issues to consider though, such as double income familes likely requiring child care, and many structure passive income in the non-working spouse's name to take advantage of the tax free threshold and lower tax rates.

      • +12

        Why does the ATO need to know my spouse's income then?

        • +28

          You are assess on individual income.

          However, some other things such as medicare levy are assessed based on family.

          • +3

            @pandadude: This is correct. Many items outside of income tax per-se rely on family income, such as the private health insurance rebate, medicare levy surcharge bracket, family tax benefits, etc etc.

            • -2

              @blint000:

              whereas Australia considers on an individual basis

              Then is that statement wrong? It is on an individual basis until it's not.

              • @MrBear: I'm not entirely sure what you are saying. Individual income tax is assessed on an individual basis.

                Medicare Levy is assessed individually too, but kicks in only once you hit a relatively low income threshold. This threshold can consider family income. Once you hit the threshold the medicare levy is a flat 2% only on your assessable income (assuming resident for full year).

                Medicare Levy surcharge for instance considers your family income as a threshold but once you exceed that you are assessed individually as well.

          • +3

            @pandadude:

            medicare levy are assessed based on family

            The ATO gouge.

      • +2

        There are a lot of other issues to consider though, such as double income familes likely requiring child care, and many structure passive income in the non-working spouse's name to take advantage of the tax free threshold and lower tax rates.

        You'd prefer double income because it creates more jobs. For every 2 people you create 0.25 jobs (assuming child care ratio of 4:1). Unless the belief non income earning is job creation by another means.

        Passive income to the non working spouse, well that is just the government shooting itself in the foot. Key is to make everyone work (exactly why house prices are sky high to make people not able to not work).

        • +6

          The both people working is what drove up house prices, the price is driven by what people can afford and having double income increases what you can afford.

          • +1

            @jerrus: Just because you pull out $20 doesn't mean you go paying $20 for a big mac. People need to get a grip.

            I am a home owner but I think people have serious issues with estimating value and what returns they are meant to be getting.

            • @netjock: Right, I'm not saying people are wise to pay as much as they do jus that prices aren't fixed "to make people not able to not work"

              You're a home owner if you sell your house is the price decided by what people can/are willing to pay or would you place a high price to ensure/encourage people have to work?

              • -1

                @jerrus: Do you have any idea how convoluted your sentences are.

                You don't have the simplest idea. Why does the government want work participation rates to increase for women then on the other hand keep on migration rates high and complain about fertility rates. Numbers don't lie.

                You're a home owner if you sell your house is the price decided by what people can/are willing to pay or would you place a high price to ensure/encourage people have to work?

                If you are a home owner it doesn't actually matter because you need somewhere to live. Even if you sell you have to buy back in. It would be the same plus transaction charges unless you are upgrading or downgrading.

                Only people with investment properties worry about what the market is willing to pay vs policies that will take away what they thought was a larger cake.

                • @netjock:

                  Do you have any idea how convoluted your sentences are.

                  People in glass houses? try throwing your sentence into Word.

                  Key is to make everyone work (exactly why house prices are sky high to make people not able to not work).

                  "why house prices are sky high to make people not able to not work" the implication you made is that house prices are a tool to encourage people to work. This is the point I've been addressing, you seem to be reading a lot extra into my sentences this may be why they seem convoluted to you. I never mentioned big mac's, fertility rates migration or any of the other extraneous things you brought up.

                  • -2

                    @jerrus:

                    try throwing your sentence into Word.

                    If learnt English in word it makes sense.

                    This is the point I've been addressing

                    I've been addressing your point. You pay what you can afford which in turn means you cannot afford to be out of work or take a pay cut. You are as muddled up as those who pay (all) they can afford to buy a house.

                    • +2

                      @netjock:

                      If learnt English in word it makes sense.

                      I think you mean "if you learnt English in Word, your deficiency, makes sense" - I was appealing to Word as a semi-impartial arbiter not saying here is where all my knowledge of the English language comes from. You brought up the grammatical issues, I was just pointing out your not really in a position to complain as, like most people (including myself) posting in forums, grammatical precision takes a backseat to speed. I don't want to get bogged down in a debate about language.

                      I've been addressing your point. You pay what you can afford which in turn means you cannot afford to be out of work or take a pay cut. You are as muddled up as those who pay (all) they can afford to buy a house.

                      I've never said what I or people in general should do with regard to housing. I was making the point that house prices are determined by the market and not by some external force as you suggested in your original post "to make people not able to not work"

                • @netjock: I agree that @jerrus’ sentences are very difficult to understand.

            • @netjock: Wouldn't the return be…I have a home that i can call my own now?

              • @ryf: Depends on what the price of that home is. Whether you pay $10 for a Big Mac or $20 for a Big Mac you can still call it your own Big Mac. I've seen MacDonalds get delivered 1 blocks using a food delivery service.

          • +1

            @jerrus: It's more complex than that Jerrus. Many people's incomes go on childcare. It's not uncommon for one persons entire wage to go on that alone, they're not paying off a mortgage with it. But that person will still work for career progression so they earn more later and their career doesn't stall too much.

    • +5

      Well that's essentially a penalization to a traditional notion of one stay at home parent and one breadwinner though isn't it?

      • +2

        All the minions need to work so the government can raise more taxes (not only the 2 workers in family but all the support services that go with it). It ain't rocket science.

    • +5

      While this statement is factual it does not answer op s question

    • +13

      Yes - tax looks at the income of an individual, not a family.

      Therefore 2 workers = 2 tax free thresholds. 1 worker means the family misses out on a tax free threshold.

      Also if a single income earner is putting in more hours to provide for the family, whereas 2 workers would each do less hours, they both may be in a lesser tax threshold and again pay less tax.

      Taxing the individuals within an entity is a poor system.

  • +11

    Two factors at play - progressive income tax and also effect of in income on Family Tax Benefits. Tax accountant might be able to explain your circumstances bit better

    • +30

      The $18,000 tax free threshold x2 versus x1 is also going to help a fair bit!

      • -15

        Does this actually apply though, because when lodging it looks at combined income not singular

        • +1

          Yes it does for each individual (unless they're underage <16 I think?, in which case it's only $5,600 I think?)
          and as mentioned elsewhere in this thread, your partner's income even though required is not really a major factor in the bulk of the calculations for tax, it's there for the calculation of Family Tax Benefits.

          • +2

            @ESEMCE: i can assure you it does - two incomes get 2x the tax free threshold
            When my wife was working before we had kids, that was the case

            • +3

              @legendary-noob: She still has the tax free threshold.
              She still has all of the benefits, just no extra new benefits.
              Sounds like she chose to give up working though.

              • +2

                @mskeggs: reading comments from p1 ama
                i agree with your point
                meaning theres way to turn things in our favour, yes

                • +17

                  @legendary-noob: Pay your wife $100k to be your assistant.

                  • +2

                    @Scrooge McDuck: ^Tactics from a real billionaire

                  • +10

                    @Scrooge McDuck: then the family would be taxed on income of 300k.

                    • +3

                      @Antikythera: I hope this is trolling but given what I've read previously on OzBargain I dunno any more…

                      • @Scrooge McDuck: Why would it be trolling, unless the assistant is doing work which is needed for OP to earn income as part of his job it won’t be deductible.

                        Cleaning the house, looking after children and cooking etc is not deductible. She would have to be doing bank work, and if she was it would be the bank paying her and not OP.

                        • @cloudy: True. But there would be grey area way to get around it. Say she makes a phonecall for you….once. You get to choose her wage of 100k per call. She would need to get an ABN and things but that should still be 100% legal from my understanding.

                          So 300K taxable gets deducted by 100K and goes back to the 200K original income but split between 2.

                          • @amrdeus:

                            Say she makes a phonecall for you….once. You get to choose her wage of 100k per call. She would need to get an ABN and things but that should still be 100% legal from my understanding.

                            Oh you would be a fool to try that. Lol that is 100% not gonna cut it and will result in heavy penalties

                            • +1

                              @cloudy: I'm in no need to even try anything like this, but genuinly curious, how come? If you had a good enough explanation of what they do, and they actually do it, how is it not 100% legal?
                              And you wouldn't actually have to pay them 100K, you'd only need 19K.

                              • +1

                                @amrdeus: Div 4A General Anti Avoidance will clearly cover that. It's a catch all for all tax scheming. If a financial transaction has no sensible economics and has the properties of lowering tax, it falls under D4A.

                                • @cloudy: Oh, never knew that. Neat. Thanks.

    • +1

      Think ftb A stops at around $115k with 2kids

  • +11

    Comparing 2 working adults with 1 working adult is comparing apples and oranges. I think the "family" part of it is just confusing the issue.

    Individually compared, you take home more than either one of them. I think that is all that matters, otherwise, what defines a family?

    • +11

      I agree the definition of family makes it complex

      Speaking from my perspective:
      I was doing the same job in a normal corporate where hours are more normal
      I was getting paid ~140k. Wife was getting ~50k back then
      I moved to a bank, had to put in double the hours, effectively making up for lost hours for my wife, get paid more by roughly my wife's share of income
      But my take home pay is lesser than when we were both working

      • +20

        You keep saying you had to do this and that.
        If you didn’t understand how tax worked before you arranged your work choices, it’s not too late to change to a different arrangement.

        • +5

          I probably know how it works on an individual basis
          Have gone past the 180k threshold only recently and found that it doesnt make sense
          It is unlikely that I will change my choice, I love what I am doing and chances are I am going to be paying more tax in coming years
          but as I said above and below - just questioning if I was missing something - and if I am not, is it fair

          • @legendary-noob: Suggest buying an investment property or look at increasing your legitimate deductible expenses like uni fee (if the course is required for your role)

            • +1

              @megadeth: too poor to negative gear anymore - not when properties around me sell for north of 2m
              damm where do people get all their money from

              • +26

                @legendary-noob: This might surprise you, but an investment property can be somewhere other than where you live.

              • +1

                @legendary-noob: Don't buy around you then. Look for an area where you can find a new build for 350-500k which would get an agreeable amount of rent and has growth prospects.

                • @IM-Cheap: Do you mind share the locations with good growth within 350-500K? Is it construction cost only?

              • +7

                @legendary-noob: you are nowhere near poor have some goddamn perspective lol

                • @abuch47: I wish I could make a poor salary of $200k…..

                • @abuch47: i said too poor to negative gear, not poor
                  why? i walked up to the bank and they said i cant afford a loan

              • @legendary-noob: Just people who earned as much as you who married people who earned as much as you.

            • @megadeth: Charitable donation

            • @megadeth: Yes, spend more to save money that's the ozb spirit

          • +12

            @legendary-noob: OP, you say tax seems unfair from a family perspective, especially as a single income family because you make comparably less money. Everyone here has told you tax is considered as an individual and you keep saying you understand that (but keep bring thing up from a family perspective??) so I won't repeat it.
            (**incidentally where does this tax as a family end? Right now you are financially providing for yourself and your wife (2 people). What about different types of families - if you take care of your parents should that entitle you to another 5x income tax free threshold (your wife and 4 grandparents), because aren't these families disadvantaged by relying on a single income earner as well? What if you had adult children who are not working (studying), should you be able to use their tax free threshold too?)

            How about another perspective for you to think about? The society perspective - you are making more money (200k), therefore you are being taxed more so money can go towards society - mainly welfare payments, but other stuff too like hospitals and roads, You are contributing more to your family, and more to society. Does that seem unfair for society to get more money from individuals with more money?

            Also I agree with mskeggs and everyone else - stop bringing up work hours/effort? I'm sure there's cushy 9-5 200k+ jobs out there…and also jobs for 50-70k where they work 60-80 hours without a bonus and probably don't enjoy their job. You don't work in either of those (and also seem to love your job), what are you comparing? Stop thinking things could be better, think of those who have it worse and that should make you feel more grounded.

            • +4

              @LiteDough: The grandparents case is not really valid as they would presumably get old age pension.

              I think the problem is for benefits, the government considers the family. For taxing, it considers the individual.
              I am fine with individual taxing, but they should only then calculate benefits based on the individual. (eg wives can then get the dole)

              • +1

                @sqrt: spot on
                i am not going to go as far as expecting the missus to get the dole - i think that should be for people that are really out of job and hence really need it
                but yes, i should have framed my post clearer like you did. benefit vs taxing and individual vs family

            • @LiteDough: to be clear, I am providing for my parents + wife + 2 kids
              i concede that the family concept makes it very vague - as i admitted in an earlier response
              but sorry - your approach seems to be "ah thats too hard, you guys sort it out yourself"

              what i struggle to see is how am i not thinking about this from a society perspective
              you are right - if assessed individually, then treat my wife and kids as standalone
              why do you group me with them when assessing the benefits entitled to them, but separate me from them when assessing tax charged to me.

              and if you went back to my post, i was comparing a like for like - dual earners for a family vs single earner for a family. I accept the point on childcare yes. but apart from that, whats the difference plz? I didnt bring up hours / effort for sympathy. I was merely pointing out that as a family unit, our effort to making a living is no different from working parents (people may beg to differ), but our outcome is clearly less optimal

      • +1

        You're working 16h/day?!

        When do you spend time with your wife and kids?

        • weekends

          to be frank, i think its quite common in my workplace, given the culture
          not 16hrs everyday but I'd say thats 70% of the time. 8.30am - 1am is norm including short breaks but more often than not finding myself going to bed at 2-3am, even as i type right now at 4.25am

          and my wife has been quite supportive by taking over most of the chores as she understands she would struggle to find a job after being away from the work force for extended period of time. hence from my perspective, we're effectively reshuffling our responsibilities - something that most people struggle to see but yeah

    • To take this to the extreme, if the tax free threshold is, say, $40k, consider a total household income of $80k by 2 people, vs $80k by one person where the amount they make over $40k is taxed.

      I need to set up a commune with a harlem of workers under the threshold, obviously.

      • The TFF is $18,200 but there is also an offset which I think brings it a bit higher but around 20k

  • +3

    I work for a bank

    The problem is right there.

    • +90

      On $200k+ and doesn't know about progressive taxation.

      • +41

        prolly in management, I.e no clue what's happening just got promoted cause for politics

        plays the game well

        • +11

          I'm glad that doesn't happen for the people running this country …

        • +44

          sorry if I misinterpreted all these as sarcasm
          but its pretty short sighted to be thinking only tax accountants work in the a bank
          there's sales, IT, quant, accountants, advisors, project managers, risk managers etc, and then the TAX accountants.
          I didnt even mention which one i was in and i feel its a pretty unfair remark to be saying people working in a bank at +200k should be across progressive tax
          by that logic, no one from banking should rely on tax accountants.

          and also, i wasnt questioning progressive tax
          my question was - is this penalising single income families unfairly - am i missing anything here - thats all im asking

          • +48

            @legendary-noob: To be clear, I think everyone who is a tax payer should understand income tax, nothing to do with a bank employee.

            It’s like saying I didn’t understand credit card interest or that a car needs regular servicing - these are very basic things.
            I learned how to do a tax return in Year 10 in the 1980s, and there are great education resources at MoneySmart and elsewhere.

            • +21

              @mskeggs: I respectfully take your point, hence i feel the remark on $200k+ is not necessary
              I am doing my own tax return, I know enough tax to deal with my life, even though I am not a tax accountant, not even an accountant
              and like everything we do in life (not just tax) you will come to many different points in life where you go, ah thats new to me, how does that work
              eg never knew medical, have a sick family, you learn about medical conditions like cancer or asthma despite not being a doctor
              eg never knew about cooking, have a new family, you learn about cooking for different family members despite not being a cook
              eg have never earned that much, still not earning that much, you try to learn about family tax
              everyone has different circumstances - in my view its not right to say everyone should be in a certain way
              as I have framed my question in the subject, im seeking confirmation if i am missing anything, and a view whether its fair. i never said i dont know how it works, as a tax payer.

              • +2

                @legendary-noob: At your income level you should use an accountant.

                • @ribze1: Why?

                  • +1

                    @chriise: They're best placed to ensure he is claiming as many deductions as he can and can advise on other tax minimisation matters.

                    • @ribze1: If you’re just salary would it make any difference what your income is to your deductions? I’ve thought about it but assumed I’d pay someone $300 to hit submit on my form - especially during peak time. I’ll look into though if they can advise more generally on strategies to reduce tax in future years etc.

                      • @chriise: I did my own return for years and then when i hit $85k base i figured it was time to see a professional and i've stuck with him (was a referral from a mate). Simple return cause i'm PAYG, no investment properties so about $170.

                        At the very least go once and see what they can offer, i was under declaring deductions such as WFH expenses at the time and he gave me advice on other ways i can save given i'm a white collar worker. For instance, if i go to a Finance conference overseas in winter then i can claim a jacket etc.

            • @mskeggs: Yes me too. And they were pages and pages long that you picked up from the newsagent. Way more complex than today.

          • +14

            @legendary-noob: Welcome to Ozbargain. These days it's full of jealous and bitter people who hate anyone that earns more than them or drives a nice car.
            Sorry OP, but unfortunately Australia's tax system is setup to penalise hard working people. What you are missing is not realising this.

            • +2

              @keejoonc: actually dont mind it being unfair or missing out
              i just wanted to check

              just wasnt expecting to be labeled management, have no clue, entitled
              sometimes i frankly wish i was the clueless management that gets paid millions
              then i dont have to skimp on everything in life

        • +1

          @djones145
          are you one that gets promoted for playing politics well, and have no clue whats happening as well?

          • +5

            @legendary-noob: Geewiz whats with the pile on, I think @legendary-noob is just pointing out how single income families are being penalised more than dual income families.

        • +6

          Probably not a fair comment to make for all we know op worked extremely hard and is good at what he does which is not tax

      • +11

        Sadly, this is more common than you'd think. The number of times I've had to explain to someone that a tax deduction doesn't mean you get 100% of the item cost back into your pockets boggles the mind.

        • +2

          Exactly this
          Was trying to "experiment on a spreadsheet" what happens if I emptied my offset account to get maximum negative gearing benefit. Concluded its freaking silly to do it as I have to lose, for example, 5k, to get a tax benefit of 2k.

          • +2

            @legendary-noob: Don’t even get me started on negative gearing 😂

          • +4

            @legendary-noob: I know people that will lose money happily so they don't have to pay income tax. Like it makes them really happy that they pay nothing to the ATO, even if they are paying for the privilege.

            • +1

              @serpserpserp: Exactly this, people keep talking about how much tax they pay, and try to fiddle with it, what they really should look is their cash flow. Negative Gearing in property is just speculative play, you hope the future capital gain can offset all your loss accumulated over year. I just find it's silly to minimising tax by getting a loss making property in order to get some rebate from your tax

  • +7

    That is unfortunately how it works since we do individual tax returns.

    Spouse income can make some differences but that's only tinkering around the edges with respect to benefits or additional costs

    It does kinda suck but that's the price of progressive taxes.

    • +2

      Why does it suck?

      • +32

        its hypocritical that we have to file taxes individually, but the non working spouse loses their private health rebate tier because their partner earns too much..

        it should be all individually or all together.

        then again the ato is all hypocrisy. must pay cgt straight away, but yet cant claim a loss straight away, can only offset.

        • +1

          its hypocritical that we have to file taxes individually, but the non working spouse loses their private health rebate tier because their partner earns too much..

          You can do it individually if your private health insurance is done individually.

          The real question is why does private health insurance give a rebate at all and why does it mean you don't have to pay MLS? It is a private decision you make so you can get better healthcare service. It does not save the government money either, they still pay all the medicare benefits for all eligible services.

          then again the ato is all hypocrisy. must pay cgt straight away, but yet cant claim a loss straight away, can only offset.

          I don't understand what you want? would you rather capital losses be lost if you cant use them right away? Or are you saying you want to offset the capital gains losses against completely unrelated income? Because that for one doesn't make any sense and two just sounds like making tax avoidance easy.

          It sounds like you want all the benefits of living in society without having to pay for those benefits.

          • +2

            @Bjingo: What do I want

            I want capital losses to be able to be written off against your income, straight away, and not needing to wait for a cgt even that may never occur in your life. if you have to pay cgt straight away based on what you have earned then losses should be claimable the same way.

            if i make 10k, well then here you go ATO have 42.5% of it.
            i lose 10k, well that's tough shit, hold on to that forever until you make some cgt.

            and I'm sure private health rebate tiers even if the insurance is individually owned insurance are worked out as a couples income.

            I don't want any benefits other than medicare which i pay the MLS for, I want the same rules applied to both parties.

            "why does private health insurance give a rebate at all" I never asked this question nor care about it, its the governments choice so i'd probly ring them up, but im sure since you think it sucks you forfeit it all with a cash donation to the ATO.

            why is it that 1 person earning 100k and 1 staying at home pays more tax than
            2 people in a couple working 2.5 days a week in the same job getting 50k… why should the tax be any diff.

            this is exactly why every business owner employs their non working spouse as a letter opener

            do joint tax returns allows one to take time off, thus can abolish child care subsidies or reduce it somewhat, then a child can actually see their parents growing up instead of some crap child care centre.

            • @Donaldhump:

              2 people in a couple working 2.5 days a week in the same job getting 50k… why should the tax be any diff.

              Well that "family" is forgoing time at work for their tax break. They might work 80 hours combined but you work 40 hours and have a spouse that does all the stuff at home and with the kids that gives you even more time back on the weekends when those two workers are catching up on everything.

              You might think you are getting the raw end of the deal because you pay more tax. But in lifestyle are you really?

            • @Donaldhump: The issue with capital being written off against ordinary income is it very easy to use that to avoid tax, it would become a primary tax planning item, well only for wealthy people. Expecting a big tax bill this year? sell a rental property at a loss to your trust, now you have less tax to pay. Thats the main issue, for the normal person it would be totally fine, but for people with money its just a chance to pay less tax when they can.

              Further suddenly investing becomes hugely less risky and your risk of loss is mitigated up to 45% investing $50,000 is basically investing $27,500 because worst case scenario that's how much you actually lose.

              You might be right I can honestly say I have never seen a situation where a married/defacto couple has different health insurance as it would cost more. Also if they did make it separate it would only benefit people with an annual household income above $210,000 any family earning less than that would lose out on money.

              why is it that 1 person earning 100k and 1 staying at home pays more tax than
              2 people in a couple working 2.5 days a week in the same job getting 50k… why should the tax be any diff.

              Thats the sacrifice you have chosen to make by being a single income family, you can change your work arrangements to match the other.
              it is also the same reason 8 people earning $18,200 each do not get taxed whereas 1 person earning $145,600 gets taxed.

              this is exactly why every business owner employs their non working spouse as a letter opener

              They aren't very smart if that's what they are doing they will have to put an additional 9.5% away for super instead of just having that money. They should run the business through the family trust so they can distribute the earnings however they want, once the kids are 18 throw some their way too.

              do joint tax returns allows one to take time off, thus can abolish child care subsidies or reduce it somewhat, then a child can actually see their parents growing up instead of some crap child care centre.

              and if it happens a lot of wealthy single people will suddenly become 'defato' and pay less tax. Also would you allow this for polyamorous families or do they not count?

              • +1

                @Bjingo:

                The issue with capital being written off against ordinary income is it very easy to use that to avoid tax, it would become a primary tax planning item, well only for wealthy people. Expecting a big tax bill this year? sell a rental property at a loss to your trust, now you have less tax to pay. Thats the main issue, for the normal person it would be totally fine, but for people with money its just a chance to pay less tax when they can.

                That can't happen because of few things: first fair market value, you can't really sell your property at loss to trust just because you like it, revenue office/ATO will assess the minimum price it can be. Secondly the transaction cost i.e. stamp duty is way too high to offset any said benefit you would gain for such thing. It would be super dumb to do such thing.

                • @od810: fair market value is not so much the issue, you can pretty easily lower the value of a property temporarily. but you're right it is not that easy because it needs to be an arms length deal, it was meant to be a simplified example to use as a way of showing what I meant, but if its too hard to believe you can look to other assets, for example; collectables, crypto, foreign currency, shares/units or personal use items. Real estate was just the first thing that came to mind but any asset that attracts cgt works the same.

                • @od810: I think most people don't get this, that market value applies to "everything" by default when it comes to taxes. People who have gotten away with these things historically (like transferring a $10,000 car for $100 at Service NSW) consider it a genius workaround that applies to everything, but lower-threshold data matching could ruin the fun any day ala the Centrelink debacle. There are lots of exemptions though.

                  Australia's most generous tax exemption may be for main residences, since it simultaneously helps you avoid paying CGT (with a 6 year buffer added on top for the years you rent, that you can even chose where it applies if you have more than one property - yet you get no main residence exemption if you live with your parents and never live in your investment property), you get to avoid stamp duty if you're a first home buyer, it allows you to live in a $3.5 million dollar apartment while receiving the pension, and the capital in property has increased in value well beyond the rate of taxable income.