Matt Canavan is keen on income splitting. Here's what it would mean for couples

Contributing sentiments towards policy:

61% : Household-based taxation would increase the effective tax rate on that second income - thus reducing the incentive for the secondary earner to (re)enter the workforce.
60% : This includes the family tax benefit and Medicare levy surcharge.
58% : But other parts of the broader tax and transfer system already consider household income when determining eligibility for benefits or subsidiaries.
56% : Because income splitting reduces tax by shifting income from higher tax brackets to lower ones, the largest benefits tend to go to higher-income households.
54% : As income rises, the tax rate applied to the upper part of their income increases.
54% : Under Australia's trust tax rules, income is generally taxed in the hands of the beneficiaries who are entitled to it.
54% : Because beneficiaries may include spouses or adult children, trust distributions can sometimes spread income across family members and produce tax savings.
54% : Supporters see it as a way to make the tax system fairer for families that share income and care-giving responsibilities.
53% : Supporters say the change would make the tax system more "family-friendly", by recognising that many families share resources and financial responsibilities.
53% : These include rules to: The Australian Taxation Office (ATO) recently stepped up scrutiny of some income-splitting arrangements, particularly those that involve trusts or business structures used to distribute income to family members on lower tax rates.
52% : Add Yahoo as a preferred source to see more of our stories on Google. Newly elected Nationals leader Matt Canavan has proposed allowing couples with dependent children to split their income for tax purposes.
52% : They involve a shift in how the tax system defines fairness between individuals, families and different working arrangements.
51% : Income splitting sits at the intersection of tax policy, family policy and labour market incentives.
49% : In simple terms, the total income of a couple could be divided between both parents before calculating tax.
49% : For example, an Australian resident taxpayer earning A$200,000 a year pays a higher proportion of tax than if that income was split between two people each earning $100,000.
49% : Advocates of income splitting often point out that two households with the same total income can pay very different amounts of tax depending on how the income is earned.
49% : The Nationals' proposals therefore represent more than a technical tax change.
48% : Spreading income across more than one person can therefore reduce the total tax paid by a household.
48% : It reflects a deeper question about how modern tax systems balance fairness, economic participation and support for families.
47% : This matters because Australia taxes people using progressive income tax rates.
46% : But where income splitting appears designed to primarily reduce tax, anti-avoidance provisions may apply.
45% : Some commentators, such as independent MP Allegra Spender in her tax white paper, argue this means wealthier households already have access to income-splitting strategies that wage earners do not.
43% : Australia's tax system contains rules designed to stop income being shifted simply to reduce tax.
43% : The proposal ultimately raises broader questions: should the tax system treat individuals or households as the main unit of taxation?

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