If you and your partner are navigating the maze of Australian tax laws, the Joint Return Test is a concept you can’t afford to ignore in 2025. Whether you’re married, in a de facto relationship, or considering how your living arrangements impact your tax obligations, understanding this test can mean the difference between a smooth tax season and a costly mistake.
What is the Joint Return Test?
The Joint Return Test is a criterion used by the Australian Taxation Office (ATO) to determine whether a couple should be treated as a unit for specific tax benefits and obligations. While the test is more prominent in the U.S. tax system, in Australia, similar principles apply when assessing eligibility for certain offsets, family payments, and means-tested government benefits.
In 2025, the ATO continues to focus on household income when assessing eligibility for:
- Family Tax Benefit Parts A & B
- Medicare Levy Surcharge (MLS) thresholds
- Private health insurance rebates
- Senior Australians and Pensioners Tax Offset (SAPTO)
- Low and Middle Income Tax Offset (LMITO)
For all these, your relationship status and whether you submit joint or individual details can affect your entitlements.
How Does the Joint Return Test Affect Your Tax?
Australia does not require couples to lodge a single ‘joint’ tax return. Each individual submits their own tax return. However, the ATO requires you to declare your spouse’s income, as this information is used to assess eligibility for various offsets and benefits.
For example, if you and your partner both earn income, your combined household income can:
- Push you above the MLS threshold, resulting in a higher Medicare levy
- Reduce your eligibility for certain family assistance payments
- Impact your entitlement to the SAPTO and LMITO
In 2025, the ATO has tightened its data-matching capabilities, cross-referencing Centrelink, Medicare, and private health fund data. This makes accurate reporting more important than ever.
2025 Updates: What’s Changed?
This year, several policy updates have made the ‘joint return’ concept even more relevant:
- Income thresholds for MLS and private health rebates have increased in line with inflation, but the ATO is auditing more aggressively for underreporting of spouse income.
- Family Tax Benefit adjustments now include a more granular assessment of combined incomes, especially for blended families and de facto couples.
- ATO myGov integration means pre-filled spouse data is becoming standard, reducing errors but increasing the chance of discrepancies being flagged.
Practical example: If Sam and Alex are in a de facto relationship and both earn $95,000, their combined income of $190,000 will put them over the 2025 MLS threshold for couples ($186,000). Failing to declare this accurately could result in unexpected tax bills or loss of rebates.
Tips for Couples Navigating the Joint Return Test
- Keep accurate records of both partners’ incomes, deductions, and any government benefits received.
- Update your relationship status with the ATO and Centrelink as soon as circumstances change.
- Review your private health insurance annually to avoid MLS surprises.
- Consult the ATO’s pre-fill data on myGov to ensure your spouse’s details are current and correct.
- Plan ahead for offsets—if one partner is eligible for SAPTO or LMITO, your combined income could affect how much you receive.
Conclusion: Get Ahead of Your 2025 Tax Return
The Joint Return Test may not require a single, shared tax return in Australia, but how you and your partner report your finances has a major impact on your tax outcome. With the ATO ramping up data-matching and policy tweaks in 2025, make sure you’re on the front foot. A little preparation now can save you from headaches—and penalties—down the track.
