Tax Question - Are single income families being penalised financially?

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    rektrading on 13/10/2021 - 15:54

    There are plenty of people on >$1,000,000 income that pays little to zero taxes.

    For 55 millionaires, the 2018-19 financial year was very good. Not only did they earn more than $1m, they paid no net tax. They achieved this through a range of methods, mostly big donations and also by spending a vast amount on accountants and tax lawyers to manage their tax affairs.
    https://www.theguardian.com/business/grogonomics/2021/jun/08…

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      RMBC on 14/10/2021 - 09:20

      +2

      We are taxed on profit, not on income.

      The article is click bait, and designed to get a response of outrage. For all we know these are people running a business, or making legitimate deductions.

      Donations are money given away to registered charities, and a desirous part of society; they're also an allowable deduction. There is nothing wrong with that at all.

      As for the other fees, it's easy to lash out without understanding what the fees are for. For all we know, it's challenging a tax ruling, and the ATO has been known for some heavy handed cases recently.

      The point is, outrage is easy, but actually understanding the situation may give a different response. Are we really against millionaires who give all their profit away for a year by donating to charity and hence have no tax to pay?

  • 

    mskeggs on 13/10/2021 - 16:35

    +1

    I am 100% on board. It is obscene that so few people are snaring so much income.
    Probably the best way to improve inequality would be to look at some sort of progressive wealth tax as well, or these few earning so much will likely just restructure their arrangements.

    It is hard to believe, but I have even heard some people think those who have such incredibly vast incomes should be paying LESS tax! LOL, right? How could they expect to prosper in a society where they were so disproportionately indulged? It would take away all their motivation to work because their extra income would no longer be benefiting society as much via tax.

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    shaiguy on 14/10/2021 - 11:53

    Completely agree with this. We lose a tremendous amount of talent to countries with lower/flat tax systems who find it difficult to come back here given our tax regime. This analogy (whilst related to the British tax system) is also very true when it comes to tax cuts etc.

    "Suppose that once a week, ten men go out for beer and the bill for all ten comes to £100. If they paid their bill the way we pay our taxes, it would go something like this…

    The first four men (the poorest) would pay nothing.
    The fifth would pay £1.
    The sixth would pay £3.
    The seventh would pay £7.
    The eighth would pay £12.
    The ninth would pay £18.
    And the tenth man (the richest) would pay £59.

    So, that's what they decided to do.

    The ten men drank in the bar every week and seemed quite happy with the arrangement until, one day, the owner caused them a little problem. "Since you are all such good customers," he said, "I'm going to reduce the cost of your weekly beer by £20." Drinks for the ten men would now cost just £80.

    The group still wanted to pay their bill the way we pay our taxes. So the first four men were unaffected. They would still drink for free but what about the other six men? The paying customers? How could they divide the £20 windfall so that everyone would get his fair share? They realized that £20 divided by six is £3.33 but if they subtracted that from everybody's share then not only would the first four men still be drinking for free but the fifth and sixth man would each end up being paid to drink his beer.

    So, the bar owner suggested that it would be fairer to reduce each man's bill by a higher percentage. They decided to follow the principle of the tax system they had been using and he proceeded to work out the amounts he suggested that each should now pay.

    And so, the fifth man, like the first four, now paid nothing (a 100% saving).
    The sixth man now paid £2 instead of £3 (a 33% saving).
    The seventh man now paid £5 instead of £7 (a 28% saving).
    The eighth man now paid £9 instead of £12 (a 25% saving).
    The ninth man now paid £14 instead of £18 (a 22% saving).
    And the tenth man now paid £49 instead of £59 (a 16% saving).

    Each of the last six was better off than before with the first four continuing to drink for free.

    But, once outside the bar, the men began to compare their savings. "I only got £1 out of the £20 saving," declared the sixth man. He pointed to the tenth man, "but he got £10!"

    "Yeah, that's right," exclaimed the fifth man. "I only saved a £1 too. It's unfair that he got ten times more benefit than me!"

    "That's true!" shouted the seventh man. "Why should he get £10 back, when I only got £2? The wealthy get all the breaks!"

    "Wait a minute," yelled the first four men in unison, "we didn't get anything at all. This new tax system exploits the poor!" The nine men surrounded the tenth and beat him up.

    The next week the tenth man didn't show up for drinks, so the nine sat down and had their beers without him. But when it came time to pay the bill, they discovered something important - they didn't have enough money between all of them to pay for even half of the bill!

    And that is how our tax system works. The people who already pay the highest taxes will naturally get the most benefit from a tax reduction. Tax them too much, attack them for being wealthy and they just might not show up anymore. In fact, they might start drinking overseas, where the atmosphere is somewhat friendlier."

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      mskeggs on 14/10/2021 - 22:35

      +2

      We don't lose anybody of value due to tax policy. Claiming so is like some long story about not understanding how percentages work, and that the waelthy are more deserving or something.

      A small fraction of Australians move abroad permanently to pursue career or fame or romance or adventure. And almost always to similarly high tax first world countries.

      We do get rid of a rump of people who prioritise greed as they jet off to petro states or developing world metropolises with poor welfare, great inequality and corrupt governments, so they can earn some USD tax free in an enclave walled away from a population that would happily do them violence.
      Good riddance, they are no loss, and in my experience are the type of people who make wherever they are much worse.

      I'm much more interested in the people who move here, often from lower tax nations, because they see the value a decent society, with limits on inequality, a strong rule of law and reasonably honest government brings, and they see it will help them and their descendents well. These people are ambitious, and decent and seeking to make a better life, not just shirking their tax rate.

      I know who makes a better neighbour.

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    netjock on 14/10/2021 - 17:05

    The top 9% of society bear almost half the tax burden (48%), where as the bottom 61% of society contribute only 12%.

    You got that right. Even if you cut out the tax dodging millionaires and billionaires and just look at salary earners $150k plus.

    The best one lately is the idea of putting a solar feed in tax on those who pay to put panels on their roof so the poor doesn't have to pay for cost of network to carry that electricity. It is like suddenly panels will grow on their roof. If someone rich puts panels on their roof and feeds it in at say 10c to push down the wholesale price of energy for the poor to benefit in addition the cleaner air they breath.

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    harthagan on 14/10/2021 - 18:37

    +3

    Thankfully you aren't in charge of setting the tax rates. Anyone who thinks that those on the lowest incomes should have to pay more tax than they already do so that the richest can pay less and become even richer is surely some kind of sociopath.

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      tsunamisurfer on 14/10/2021 - 20:02

      +1

      It's really unfortunate that a normal discussion about taxation degrades to name calling.

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  dasher86 on 13/10/2021 - 15:47

  +16

  Work less hours, make wife work.
  Problem solved.

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    ShoeJunkie on 13/10/2021 - 15:59

    I love a practical solution!

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      legendary-noob on 13/10/2021 - 16:40

      -1

      probably a solution if she listened to me
      but skills probably obsolete by now and would be hard to find employment
      but again, i am happy for her not to work
      i am just questioning shouldnt the tax system assess family income rather than 2x individual, standalone income

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        ShoeJunkie on 13/10/2021 - 16:42

        +1

        There are countries that allow income split. Unfortunately we are not one of them.

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        Dont Care on 13/10/2021 - 20:16

        lol they both work long hours away from their child. your wife made the choice not to work. so what's your problem man

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        SlickMick on 14/10/2021 - 10:56

        Off topic, but something to consider… just the point of your wife becoming obsolete raised alarm bells for me…

        one day the children will be grown, your wife will be middle-aged and have time on her hands.
        She might be one that feels she put in all the hard work raising the children and is ready to retire, then you're fine.
        If she feels that she gave up her career for the family, there could be resentment. I've known relationships to break up over this.

        If your wife had any ambition before you had kids, I'd be seeing that she has a plan for getting her career back on track.

        I got really lucky - not sure how it happened, but my wife took a couple of low-level jobs after ~15 years out of the workforce, then she scored the right job, did her masters and is now our primary breadwinner. But that won't always happen by luck - I reckon planning and retraining might be required.

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          serpserpserp on 14/10/2021 - 19:13

          @SlickMick: Username checks out.

          But what happened to your career?

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            SlickMick on 14/10/2021 - 20:36

            @serpserpserp: I allowed a company to use my technical skills in a field away from my specialty, but without providing any training.
            So I ended up being a decade out of date in my field, but without any qualifications in the new field.
            Then the company changed their mind again, and made me redundant. I was 3 years without a job, and had to start again from the bottom.

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  CheapSticks on 13/10/2021 - 16:19

  Yes "high income" earning single families are penalised - which is unfortunate for highly educated and progressive people like yourself i.e. do not get benefits plus pay higher tax

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    serpserpserp on 14/10/2021 - 19:14

    +1

    Sure he is progressive? He doesn't like our progressive tax system ;)

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  Bjingo on 13/10/2021 - 19:59

  I would have thought a fair tax system would look at combined income for a family and apply the tax bracket accordingly?

  There are a lot of issues with this,

  • Is the tax brackets the same as normal so over 180k is the max or does it increase for each family member so 360k is max for 2?
  • Do they get 18k tax free or is that increased too?
  • Does it only work for monogamous families or poly families too?
  • Do you have to be in a relationship for a certain amount of time before they combine the tax brackets?

  Basically this would just become a tax planning tool if it combined the tax brackets and would be awful for duel earners if it did not combine them and taxed them on total.

  It has been mentioned but you cant look at it as a family earning money but as 2 people earning money independently of each other.

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  Adrian Player on 13/10/2021 - 20:11

  +1

  2 x 18k tax free thresholds and only maxing out in the 40% bracket will do that yeh.

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    ribze1 on 14/10/2021 - 11:09

    The answer in a nutshell

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  Dont Care on 13/10/2021 - 20:12

  +1

  You should put your wife to work if it's all too hard.

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  ajsr8 on 13/10/2021 - 20:39

  Become a dole bludger.

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  mattisrad on 13/10/2021 - 22:41

  You get a wife who cooks at home

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  mungas on 13/10/2021 - 22:47

  Tax accountant here, a few things said above are true, unfortunately your average rate of tax may be higher than the two individuals in your example given.

  Unlikely to be a feasible option, but you could consider restructuring the relationship with your employer. Perhaps you could “consult” to your employer, and have your employer engage you for your services through you chosen vehicle (trust, company etc). You and your employer would run into a myriad of issues to consider (preventing this specific circumstance from being effective), however there could be opportunities for it to work, and there could be options to engage your wife to assist in performing administrative services, allowing you to tap into her marginal tax rates.

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    legendary-noob on 13/10/2021 - 23:01

    thanks!
    im sure im so replaceable that they wouldnt entertain this haha
    but thanks anyway

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    wildstone on 13/10/2021 - 23:49

    +1

    Wouldn't this still need to pass the PSI rule?

    • 

      RMBC on 14/10/2021 - 09:21

      Absolutely

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      mungas on 14/10/2021 - 09:21

      One of the things to consider yes, however the PSB rules allow the PSI earner to retain funds within the structure, and depending on what OP does/who he delivers services to, the rules may apply to OP's circumstance.

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    TheDolphin on 14/10/2021 - 09:29

    mungas, I didn't think that this would work as it would be considered "personal services income", in particular fail the 80% rule?

    OP. Unfortunately is does stink, I remember last century there was a stink about this and it was suggested couples should be allowed to income split i.e. combine their income, average it out and pay tax on that but it went nowhere. It sucks that for any government benefits they look at combined income but for tax it's individual.

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  kaleidoscope on 13/10/2021 - 22:55

  Are single income families being penalised financially?

  Yes /thread

  —-

  There is sadly no argument here its just the way it is. Talk to an accountant if you want to get some ideas on saving bit more tax like contracting and payroll into a trust or company. But this would mean you may loose out on perm employee benefits like bonuses and leaves etc. Good luck

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  Miss B on 13/10/2021 - 23:09

  +4

  If your children are under school age (and possibly even if they're not), you're probably saving by not having to pay child care. Often it's not worth both parents working because the cost of childcare wipes out the second income.

  If it helps, you also earn more than 97% of taxpayers.
  https://www.abc.net.au/news/2021-06-09/typical-australian-wa…

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    legendary-noob on 13/10/2021 - 23:55

    -1

    again not trying to compare
    but im not even mid management in the bank
    and we're pretty heavy top

  • 

    leiiv on 14/10/2021 - 03:11

    Both parents can work part time 50% each and come out with more income..

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  Laurana on 13/10/2021 - 23:11

  +7

  As a US citizen, I've been complaining about this for years. There are a huge number of things that I prefer about Australia, and its tax system, but this is not one of them.

  I'm fine with individual taxation and not allowing couples to file taxes jointly, but if the government doesn't recognise my relationship when I'm paying tax, then it should be consistent and not recognise it when I'm unemployed and would like to apply for new start allowance.

  My sister and I used to live together, and during that time she worked part time and was able to get government assistance to supplement her income while she studied full time. She had a boyfriend during the time we lived together. A year goes by and they decide to move in together. Suddenly his income meant that she didn't qualify to receive government assistance, but she still had to pay for half of the living costs. Yes she made the choice to move in with her, but she was 'penalised' financially because of it. Lots of couples (as pointed out in other threads here) don't share their finances, yet the government treats them as a family regardless.

  I get that family payments should be for those in dire need, so fine, treat couples as a unit. But then use the same system for tax, or at least offer some sort of deduction.

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    p1 ama on 14/10/2021 - 03:41

    +4

    She had a boyfriend during the time we lived together. A year goes by and they decide to move in together. Suddenly his income meant that she didn't qualify to receive government assistance, but she still had to pay for half of the living costs.

    I’m not trying to suggest anyone commit fraud, but what exactly constitutes a “boyfriend”? Could he “officially” be her housemate?

    I get that family payments should be for those in dire need, so fine, treat couples as a unit. But then use the same system for tax, or at least offer some sort of deduction.

    Yes, but I think this is missing the woods for the trees a bit. The truth is that if we keep total tax revenue fixed and total welfare expenditure fixed, then if someone pays less tax, someone else has to pay more, and if someone gets more welfare, someone else has to get less…etc.

    This is why I think framing the whole discussion as being “penalised” is a very disingenuous way of approaching it.

    If you take a hypothetical world where 1 x $200K income and 2 x $100K income were to pay the same amount of tax, you can’t just chop down the tax paid by the first family, you would have to have these two cases meet somewhere in the middle (i.e. the first will pay less tax vs. now, the second will have to pay more tax vs. now).

    You could easily make the argument that the second family is being “penalised” in the new system. This wouldn’t be unreasonable either - they would pay more transportation, education, childcare…etc. costs because they have two people working.

    What it really comes down to is that people can pool finances, but not time. No matter how you slice or dice it, 2 x $100K family spends twice as much time working as a 1 x $200K family and realistically earns half as much.

    If anything, the current system hugely penalises dual income families due to how expensive childcare can be, how difficult it is to take maternity / paternity leave…etc.

    • 

      leiiv on 14/10/2021 - 04:19

      No matter how you slice or dice it, 2 x $100K family spends twice as much time working as a 1 x $200K family and realistically earns half as much.

      Huh? What? NO. You need to take into account "pay rate per hour of working" and not just consider the total amount of income per year. 2 X $100K at 50% FTE has exactly the same working time spent as 1x $200K at 100% FTE. But the former will pay less tax.
      It is a significant factor and that's what makes the income tax unfair. People working long hours and people working few hours who get the same amount a year are taxed the same. IE, poor people pay more tax per hard work/labour.

      And what's with the goal of "keep the total tax revenue fixed and total welfare expenditure fixed"? We don't need to keep them fixed, they will always change anyway. If people behaviour change, eg more couple work part time each, the total tax revenue will decrease. If people's salary increase, tax revenue will increase, etc.

      • 

        p1 ama on 14/10/2021 - 04:33

        +5

        Huh? What? NO.

        Always love the ones who come out swinging just to miss.

        Think you’re a bit confused, read the OP again - it’s OP complaining about being taxed more than some other family where both members work full time. My point is just that no matter how you dice it, OP is better off than the other family despite paying more tax.

        It is a significant factor and that's what makes the income tax unfair. People working long hours and people working few hours who get the same amount a year are taxed the same. IE, poor people pay more tax per hard work/labour.

        Well our tax system is based on how much you earn, not how many hours you work. This is an entirely different discussion though.

        And what's with the goal of "keep the total tax revenue fixed and total welfare expenditure fixed"?

        You have to keep the discussion ceteris paribus, because there are actually two different questions - how much tax should we raise as a society, and how should we distribute that tax burden amongst everyone.

        Or in other words, what’s the size of the pie and how do we cut it up.

        You have to be clear whether you are talking about the former or the latter in any economic discussion (not just tax). How much taxes we should collect is a question about the size of government and what services should be provided. That’s not the discussion here. This is clearly a distributional question.

        In other words, the argument of “group X should pay less tax” is moot, because you’re making a distributional claim and you’re hiding the fact that the statement has to also reflect that some other group Y will have to pick up the burden.

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          leiiv on 18/10/2021 - 00:44

          @p1 ama: You keep saying "different discussion", but all of the sides are interrelated and one affects the other one.

          My point is just that no matter how you dice it, OP is better off than the other family despite paying more tax.

          Exactly, my point is the opposite. Better off in terms of what? You can't compare them without knowing how much time the parents work to obtain $200K vs $100K per year and how much their per hour rates are.
          The ATO is better off from getting more tax from OP.

          • 

            p1 ama on 18/10/2021 - 01:50

            @leiiv:

            You keep saying "different discussion", but all of the sides are interrelated and one affects the other one.

            Yes, but you cannot discuss a broad policy base as tax policy without addressing exactly and precisely what you are talking about. FWIW, I write research papers on tax policy for a living, so I understand how to frame the discussion.

            Exactly, my point is the opposite. Better off in terms of what? You can't compare them without knowing how much time the parents work to obtain $200K vs $100K per year and how much their per hour rates are.

            The "per hour rates" don't ultimately matter because that's not how we tax people. Your per hourly rate can be $20 per hour or $100 per hour, what matters is how much you make each year.

            When I say "better off", I mean it in a general sense - a household where two individuals are working will have to pay more in a variety of different ways - e.g. transportation, education, equipment, childcare…etc. Not to mention the other glaring benefit of one person not having to actually work.

            If you want "my view" on the matter, it's that governments should not be in the business of dictating personal relationships and how people live their lives. I believe that both taxes and benefits should be judged on an individual basis. In other words, we pay taxes as individuals, and we receive benefits as individuals as well.

            In case you think I'm some sort of barbarian, one of the policies which I strongly disagree with is that when applying for a disability pension, Centrelink will take into account both the individual and their partner's income. My strong belief is that the partner's income is irrelevant if one needs a disability pension (in the same way that my partner's income should be irrelevant to my taxes).

            FWIW, I don't understand single income families. If my partner worked and I stayed at home and earned nothing, I'd feel like such a mooch. I'd also feel so restricted and dependent (in a way that I think is really unhealthy). I'd feel guilty spending someone else's money, just like how I felt guilty spending my parents' money after I was an adult. I wouldn't be able to live with myself, but that's just me.

            (In case you were wondering, my partner and I both work, we maintain our own finances and contribute equally to a joint account which we use to pay for family expenses, e.g. mortgage, bills, school fees…etc. Apart from that, we spend our own money and we're both happy).

    • 

      Laurana on 15/10/2021 - 00:03

      You’re such an economist :p. You make valid points and I know there are bigger fish to fry, but the inconsistency of the treatment will always rub me the wrong way.

  • 

    No ONE on 14/10/2021 - 20:40

    +1

    with individual taxation and not allowing couples to file taxes jointly, but if the government doesn't recognise my relationship when I'm paying tax, then it should be consistent and not recognise it when I'm unemployed and would like to apply for new start allowance.

    Pretty much on point how the government is double standard.

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  BobLim on 13/10/2021 - 23:14

  IMO those studying at TAFE or uni should be able to "save" and carry forward their unused tax-free threshold as an offset to be claimed when starting work after completing the qualification - or some other sort of 'smoothing' effect over the first few taxable years of working.

  Surely trades leaving school at 16 and earning a reasonable income from day dot are ahead for many, many years over those who are supposedly sacrificing years of their life to deliver "higher value professions"?

  Perhaps a large capital gain could be split equally over up to 3 income years or something too?

  • 

    91rs on 14/10/2021 - 10:09

    Never heard any apprentices say they earn a reasonable income from day one.
    You'd also have to then throw in the same bucket retail workers who are working for very little while at school of if they've left school and aren't continuing on to TAFE or uni who'd be disadvantaged as they had to start working (for many it's not a choice of when to start working) over those who have the time and ability to not need to work while doing additional study full time (assuming without any employment).
    Then those who were at uni walk in to a much higher paying job than anything in retail and have an instant unused tax-free threshold that would work out better for them.
    You'd have people making the same argument for mothers who have kids that take time out of the workplace to raise children, should those years then stack up and credit so if/when they decide to return to work they can use those credits too?

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  WreckTangle on 13/10/2021 - 23:32

  I resent paying a third of my income to subsidise long term unemployed deadbeats and “sickness” beneficiaries. I don’t bring it up though.

  • 

    nosey on 14/10/2021 - 10:52

    +1

    Think of this as a mental health tax so you don't have those deadbeats forced to 'work' with you.

    I don't mind helping support people with health issues. Not everyone is blessed with good genes or parents that teach them that a carton of smokes, a bottle of Bundy and 3 meals of hot chips a week isn't good.

  • 

    Yotta00 on 15/10/2021 - 08:17

    +3

    Trust me, I used to think that until I had a taste of living in the third world for a little while. You don't want hoards of deadbeats creating slums, committing crime and having to carry a glock each time you go out. I paid 1/3 of of my 130k in taxes and it hurts, the alternative is much worse. At least you have a choice to offset your tax, by buying a house and claiming "depreciation" as rental losses.

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  Drj55 on 13/10/2021 - 23:36

  +4

  Yes. Handouts are based on family income, and yet income tax is based on personal income. Family tax benefit is supposed to help but cuts out at some ridiculously low level.

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  jv on 13/10/2021 - 23:36

  -1

  Tax Question - Are single income families being penalised financially?

  No

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  duluxe2000 on 13/10/2021 - 23:56

  +2

  Wait for the next stage of income tax reform, where 45k -200k would be taxed at 30%, there won't be much difference between an individual earning 200K and 2 people earning 100K each (~10K difference).

  The family factor is not the point here, the point here is that the more you try to earn, the more tax you need to pay which demotivate you to work harder and earn more.

  • 

    harthagan on 14/10/2021 - 00:02

    yes except those poor souls currently on 200k will be on 300k by then so they will still be the ones complaining lol

  • 

    Mistredo on 14/10/2021 - 00:11

    Is that happening any time soon?

    • 

      duluxe2000 on 14/10/2021 - 00:18

      2024-2025 plus Coalition is still in the gov lol

  • 

    p1 ama on 14/10/2021 - 03:43

    +6

    the point here is that the more you try to earn, the more tax you need to pay which demotivate you to work harder and earn more.

    I have never, in my entire life, met a person who does not want to earn more because of taxation.

    Even if such a person existed, good for them, they can continue working their current job and earning their current pay.

    • 

      Oipjo on 14/10/2021 - 10:32

      +1

      Hello, is it me you're looking for?
      I'm in the same position as OP. I earn a good income ~$230k while wife is off work, but due to disability she is unlikely to ever earn more than $40k p.a. She's also lost all her disability pension payments, and benefits because she married me! Technically; thats the biggest mistake we made financially; she is effectively a single parent currently (without benefits of course; because #married) as I'm only 'fully present' for around an hour or two a day including weekends.
      My income increased through a lot of early career moves; but I burn myself out frequently at the current rate of responsibility which I take as a sacrifice so we can set up the family well into the future - however; because of taxation, I don't have much more 'take home pay' with any pay rises; my employer is prompting me to take on more responsibility (and offering progressive more pay on each contract renewal for doing so) but I would rather stay on my current workload and responsibility; even drop down a little and take a small pay hit to avoid the burn outs… Unfortunately, rejecting the responsibility is not a good look; and actually more difficult to do; naturally the responsibilities would fall on me whether I accept them or not.
      If I was being taxed a lower rate; I wouldn't be looking to downscale my responsibilities, but over even $180k, for the loss of family time, mental health and wellbeing; the income you earn over is not really worth it when taxed at 45%; but having those discussions with the employer is difficult meaning I may need to switch jobs occasionally to avoid becoming too embedded as an SME at my place of work and taking on all the extra ownership for an extra $10,000-$20,000 taxed at 45%; plus paying more Medicare Levy Surcharge etc that goes along with it (so more like 50%+ tax on additional income). Its a bit silly I should cover my wife who's not working on a basic family (no benefit) tax Private Health Insurance as well; but that's another discussion. We're doing the 'right' thing though; paying all our dues, no dodgy stuff to see here.
      I will work hard for a few more years so the family is sufficiently set up; and then scale down to something ~$120k where I can shut off after work hours; because I can appreciate my brain is turning to mush, and my primary goal is to be a present parent as the kids grow up.

      • 

        legendary-noob on 16/10/2021 - 19:13

        Exactly this
        Wife's health deteriorated somewhat after giving birth to 2 children
        As I said else where in the post, doesnt matter my position as arguably i can still afford our life style and can cope with the extraordinary hours to earn my pay
        But that doesnt mean its fair as I am not wealthier than 2 working parents
        I get, on average, 5-6hours of sleep these days during weekdays and pay back my sleep debt on weekends lol

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      misu p on 15/10/2021 - 11:25

      +1

      Hello there, nice to meet you. I am in the top tax rate and fine with it too.

      I enjoy feeling safe walking on the streets and not having to worry about my house being broken into and I pay for the privilege.

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  Mistredo on 14/10/2021 - 00:23

  +3

  I would have thought a fair tax system would look at combined income for a family and apply the tax bracket accordingly?

  Then you have visa holders who pay the same taxes as you, but they are ineligible for a lot of stuff. Sadly, the world is not fair.

  But yeah, I agree with you. I would like to see some options for single income families.

  • 

    p1 ama on 14/10/2021 - 03:45

    I would like to see some options for single income families.

    Why? Society would just be paying people to sit around and not work. Remember that if someone pays less tax, someone else has to foot the bill.

    • 

      leiiv on 14/10/2021 - 04:25

      No, the country can just make do with less tax.
      And they are not paying people to just sit around. The "unemployed" parent still do many things at home and will put less pressure on childcares.
      And a lot of people already "sit around and not work" and still make a lot of money. They can foot the bill.

      • 

        p1 ama on 14/10/2021 - 04:39

        No, the country can just make do with less tax.

        That’s a completely different argument to what is being made here.

        And they are not paying people to just sit around. The "unemployed" parent still do many things at home and will put less pressure on childcares.

        Well they also don’t have to pay for childcare, so they already do benefit from that.

        And a lot of people already "sit around and not work" and still make a lot of money. They can foot the bill.

        Again, this is an irrelevant point.

        You seem confused.

        • 

          leiiv on 18/10/2021 - 00:28

          @p1 ama:

          You seem confused.

          Likewise, this is an irrelevant point.
          Your arguments do not make sense.

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  leiiv on 14/10/2021 - 03:09

  It has always been that way, but probably not as obvious as 1+1=2 to some people.
  Especially since they increased the tax free threshold, the difference is much more obvious.
  So considering workload to gain ratio, it is always better for a couple to work part time 50% FTE (full time equivalent) each rather than just one person working 100% FTE.
  I don't see the logic of the current tax law there, why is a family which one person working 100% FTE must pay more tax than a family which two people working 50% FTE??
  There used to be a spouse offset many years ago to balance that, but no more.
  As a normal employee of a bank, you won't have an easy way to improve the situation. I don't think a tax accountant can do much.

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  LoserScott on 14/10/2021 - 03:43

  Split your salery in two, ask Ur partner to open a busy, invest 100,000 of income your getting from work in her idea, run it as a ABN, and she will get a income paid by you.

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  Stromae on 14/10/2021 - 05:57

  Move to a capitalist country like US or Switzerland where your taxable income is calculated at family level, rather than at individual level. By this, I mean your income is calculated based on how many dependencies you have. Many countries have this income tax calculation method.

  Australia is a joke when it comes to income tax paid by single income individual with stay at home partner and young children.

  Anyway, on your current income of 200k, why arent you gaming the system by getting negatively geared investment properties and reducing your taxable income to below 80k a year. There are lot of loopholes to reduce your tax. The rich and the poor dont pay income taxes, the middle class do.

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  Wallyt99 on 14/10/2021 - 06:50

  Unfortunately the tax system disincentives marriage.

  For example the FHB grant. As a couple only one entitlement, vs. Two single people getting it twice.

  Whilst there is Family Tax Benefit A and B - for high income earners these don't really balance out the negatives.

  • 

    Stromae on 14/10/2021 - 06:58

    I couldn't have said it any better.

• 

  Thaal Sinestro on 14/10/2021 - 06:54

  +1

  The system is really unfair for traditional "single income" families. Also, double income families have massively subsidized child care costs. They're rolling in money, yet the governments keeps handing them "free stuff". Double income families are one of the main reasons why housing has become so unaffordable. In the past all it took was one income to pay off a mortgage.

  Eliminating the tax free threshold would help to equalize things. Also income splitting, as people have mentioned.

  • 

    GourmetFoodie on 17/10/2021 - 09:25

    Yep. And they’ve just increased childcare subsidies to people earning up to about 360k!!! No cap!!!!! And we wonder why so many kids are developing mental illness…

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  Cusacka on 14/10/2021 - 07:12

  If you're on $200k you should have significant investments that you should put into a family trust or your wife's name to use her tax free threshold.

  • 

    eek on 14/10/2021 - 11:43

    If you're on a 200k salary as a PAYG employee you're already taxed through the employer before you even see it on your payslip. There's no way of avoiding that tax, only reducing it after the fact with 'losses'. If you run a business as a PTY LTD then you could pretend to employ your wife and spread earnings that way. it also opens up other avenues of writing off vehicles, phones, etc etc as "business expenses"

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  Cheap Steve on 14/10/2021 - 07:22

  If this were the 80's or 90's you could just put your money in a movie or ag scheme and get a massive tax deduction.

  Your actual movie/ag scheme will go bust (-100%) but you will save on tax (+50%).

  Be grateful this rubbish is no longer around.

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  reactor-au on 14/10/2021 - 08:10

  +1

  The concession limits for families is higher than singles, so no.

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  DarkOz on 14/10/2021 - 08:13

  +2

  Why don't you work less to the point of only earning $100k and get the wife to work for the other $100K? Problem solved.

  • 

    p1 ama on 14/10/2021 - 13:07

    Because this is all a disingenuous discussion. Most actually do not prefer 2 X $100K income, they just want to complain about someone else paying less tax.

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  Ace26 on 14/10/2021 - 08:42

  OP go to an established accountant (not some run off the mill tax returns for $49 people). They may be able to structure your income and or expenses in a most tax efficient way, if not for the current tax year it will be for the next.

  Worth getting a professional advice imo.

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  spurf on 14/10/2021 - 09:08

  The tax system is far from perfect but it isn't something you can easily change unfortunately. As has been mentioned, look to efficiently structure your finances to leverage your partner's low income. That includes putting any investment's in her name and contributing to her super. You can also put a small amount in your children's names but be mindful that their tax free threshold is $416 until they are earning money directly.

  • 

    ribze1 on 14/10/2021 - 11:13

    Minor trust with wife as trustee

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  apple2016 on 14/10/2021 - 09:09

  Are single income families being penalised financially

  The reality is that in Australia there are no tax/economic benefits for a family unlike some European countries. This gives you an impression that you are at disadvantage

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  balloontree on 14/10/2021 - 09:29

  +1

  Salary sacrifice - cars, stuffs or super (15% tax)

  Is the company able to put into your abn and you can distribute to your family? Trust?

  Deductibles

  Stock options instead of fiat?

  • 

    No ONE on 14/10/2021 - 19:51

    Just because you have ABN, does not mean you can split income through ABN/Trust. There are anti-avoidance law that makes those arrangements null.

    PSI and PSB is there for a reason. ATO has broad term under anti-avoidance law that can make dodgy arrangements void.

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  balloontree on 14/10/2021 - 09:32

  Go to a tax lawyer

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  buckethat on 14/10/2021 - 09:37

  +2

  The way I see it mate, you're better off having your wife be a stay at home mum, especially because you have two kids. And you're also saving money from having to put them in childcare.

  The end result imo is probably better for your kids, compared to the couple that both work full time for 100k each. The difference in tax you're paying, you're probably saving by not having to pay for childcare.

  And having a stay a stay at home parent, I'd assume shes doing a lot of things around the house, cooking, keeping the place nice and clean, etc. Which probably results in a nicer living environment than having two tired parents who has less time and energy to do so.

  • 

    lonewolf on 14/10/2021 - 12:15

    Exactly as well as also more time to spend with the kids and make sure the kids needs are always being met as in homework, play time, keeping them interested in things. Most families would be happy to be able to afford having a stay at home parent. Personally I would much rather spend my time with my own kids than go work with people who are mainly just work colleagues and for managers who basically get most of the benefits out of my work.

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  Mark1159 on 14/10/2021 - 09:49

  +4

  You’re on 200k
  You are in finance industry
  You come to OzB financial advice

  • 

    s1Lence on 14/10/2021 - 16:41

    ikr go ask a bloody coworker, you're in a bank for crying out loud

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  idonotknowwhy on 14/10/2021 - 10:14

  +1

  You can do some shitty little things to lower your tax return like

  • Put all your income-earning assets (shares, interest in the bank, etc) in your wife's name, so that they fall into the tax-free threshold.
  • Invest some money in your wife's superannuation
  • Probably some other similar things if you ask an accountant
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  91rs on 14/10/2021 - 10:27

  +2

  Oh look it's another day on the internet where some entitled parent (entitlement seems to peak between parent and boomer) who earns more than four in five Australians and is complaining about it.
  I'd hope you can see how badly this comes across, you're suggesting that as you're a parent you should pay less tax than singles (no family or kids) that earn the same money as you or you should be able to pay less due to the fact you earn enough so your wife doesn't have to work, another rare situation in Australia these days.

  I can see the argument the 2 X tax-free thresholds vs 1, however that's your problem, not the ATOs problem to solve. If it burns you that much find a lower paying job and tell your wife that you want her to work so you can both take advantage of the TFT. Or keep working there and get her to work so you've got even MORE money!!!
  You're also probably very unaware of all the things that 2 working parent households have to juggle over the situation you're in where one person works and one person does everything else, i'm sure that probably offends plenty of families where both parents work and don't have a free moment for anything else.

  While you may not be in finance at the bank (as is obvious from your post), it's clear you do have the attitude that fits in well at a bank, the same reason why people hate banks.

  • 

    p1 ama on 14/10/2021 - 13:10

    +1

    While you may not be in finance at the bank (as is obvious from your post), it's clear you do have the attitude that fits in well at a bank, the same reason why people hate banks.

    Hey, that's rude. I'm an ex-banker and I agree with you completely…

  • 

    legendary-noob on 14/10/2021 - 13:21

    LOL
    The one thing you say that enlightened me was that the comparison vs singles with no kids.
    I admit i wasnt looking at this from that perspective and its a fair comment
    I dont mind all the other criticism except for the entitled bit, such an irresponsible statement
    Its OK. Good luck in life mate.

  • 

    mdavant on 15/10/2021 - 13:53

    -1

    Don't worry, the extra tax he pays, goes to subsidise a lifestyle you haven't earned yourself.

    But hey, be critical and all you are probably entitled to that as well.

• 

  5thQuarter on 14/10/2021 - 10:43

  Yes, and for some reason no one wants to talk about it.

  In a similar situation, my partner was working a contract role which just so happened to finish up shortly after the start of COVID shutdowns (June 2020), in an industry that was severely effected by COVID (entertainment). She was getting around 70k p.a. for her role, However, due to my income of ~130k, she is illegible for any government benefits like Centrelink, JobSeeker.

  So we've had our household income slashed significantly with no way around it (other than trying to find work in an unrelated field in the middle of a epidemic, like 90% of the rest Melbourne who were put out of work). It would be great if we could have combined Tax-Free-Threshold or anything to assist. But when you try to have a conversation about it people seem very dismissive.

  As someone mentioned previously. There is no incentive to partnering up. If she was a 'roommate' then she would be entitled to government benefits, but because we're 'partnered', she isn't.

  • 

    [Deactivated] on 14/10/2021 - 13:08

    But when you try to have a conversation about it people seem very dismissive.

    I have experienced the same from people who were not basically uprooted. They say that everybody is using COVID has an excuse for everything, perhaps some/many are but what about the one who were actually severely affected. I am going to seek mental heath help soon due to the layoff affecting my general morale and I really do not have the energy to restart everything again I had worked really hard for.

  • 

    Laurana on 14/10/2021 - 17:16

    Exactly this. The biggest issue is that no one wants to even talk about it.

    People treat it as if you should suck it up because you’re in 6 figures, but reality is that your household income was slashed in half and a single person in the same situation would be receiving assistance to make do.

    As far as I know, income protection insurance only covers you for long term disabilities, etc and not just for regular job loss. So when you’re partnered, it makes me wish to go back to the US where everyone can qualify for unemployment benefits. Having help be dependent on your partner earning under $60k (they just upped it to $80k during COVID) is truly bullshit.

  • 

    p1 ama on 14/10/2021 - 18:38

    +1

    But when you try to have a conversation about it people seem very dismissive.

    Because these are the sorts of issues that much of the population have faced not just temporarily through a global pandemic, but for their entire life.

    When the reality of life for many people is quite literally unstable employment, exploitation, hazardous work for menial pay, it seems like poetic justice for the upper middle class to finally get a taste of what living life on the edge is really like. Having to put up with all of these terrible conditions for $60k p.a. just to be able to put their kids to school and put a roof over their heads is something that many families have to deal with on a daily basis.

    She was getting around 70k p.a. for her role, However, due to my income of ~130k, she is illegible for any government benefits like Centrelink, JobSeeker.

    When you put it into context, I hope you can at least see why some would be dismissive of a family's income going from $200K to $130K. Like yes, your income went from top 10% to top 20% (or whatever). Please be grateful that you're still earning more than 4 in 5 people and still able to live more than a comfortable life. It's not hard to see why complaining about this will rub some people the wrong way.

• 

  OzHunterNSW on 14/10/2021 - 11:28

  +3

  Your stay at home partner is saving the family thousands by not having to send children to day care. You do not need takeaway, nor employ a house cleaner. Effectively, you both are working, you are a partnership, and a team. Think positive and you will find the benefits of your arrangement outweigh simple govt handouts.

  • 

    Vote for Pedro on 14/10/2021 - 13:56

    Could this be the most irrelevant comment on this thread

• 

  afah0447 on 14/10/2021 - 11:40

  +6

  'fair tax system ' - the Australian tax system is far from fair!!

  Some major inequalities are:
  * negative gearing (investors massively advantaged vs renters)
  * family trusts (essentially the rich massively advantaged versus the poor/wage earners)
  * franking credits (rich retired asset holders getting a free kick at the expense of taxpayers)

  And these are just how individual tax system favours the rich…i dont want to even get started about all the perks and legal loop-holes open to corporations for them to elect not to pay tax.

  • 

    Eeples on 14/10/2021 - 12:00

    And….Pre tax Super contributions.

• 

  Blakus on 14/10/2021 - 12:04

  +1

  I’d prefer if we were taxed as a couple rather than individually.

  For every benefit it’s assessed on family income, yet we are taxed individually.

  Family Tax Benefit B was designed to address this to some extent. It was removed a number of years ago by a liberal government.

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