The Dependant Spouse Offset is being phased out.

From 1 July 2011 (i.e. effective for the 2011-12 tax year), the dependent spouse tax offset is restricted, and is only available for a spouse:

  • born before 1 July 1971; or
  • unable to work due to invalidity or carer obligations.

From 1 July 2012 the offset is further restricted to dependent spouses born before 1 July 1952

Family Tax Benefit Part B exclusion: The offset is excluded for taxpayers whose adjusted taxable income (see below) is more than $150,000, or a member of a Family Tax Benefit Part B family.

Value of Offset: For those still eligible to claim, the maximum dependent spouse tax offset is:

  • $2,423 in 2012-13
  • $2,355 in 2011-12

Income Test: The value of the offset reduces by $1 for every $4 by which the adjusted taxable income (see below) of the dependent spouse exceeds $282. This effectively removes the offset value at the upper limit of adjusted taxable income of:

  • $9,973 (2012-13)
  • $9,702 (2011-12)

Not Refundable: The offset can be used to reduce tax payable, but is not refundable, nor is it available to offset the medicare levy.

Residence: In general, both the taxpayer and dependant must be resident for tax purposes, and part-year claims are possible on that basis.

“Adjusted Taxable Income” for the purposes of claims means the total of:

=  taxable income  
     + adjusted fringe benefits (reportable fringe benefits multiplied by 0.535)
     + tax-free pensions or benefits
     + target foreign income (income from overseas not reported in your tax return)
     + reportable superannuation contributions
     + net investment losses

less deductible child maintenance expenditures.

Zone & Overseas Offsets: Dependant offsets continue to form part of the calculations for the zone tax offset, overseas forces tax offset and overseas civilian tax offset.

Carer Spouse and Invalid Offsets To Remain

The carer spouse tax offset is for a taxpayer with a dependent spouse who is unable to work because of care obligations.  A carer spouse is wholly engaged in providing care to an invalid relative; or to whom a carer service (Veteran’s) pension is being paid.

The invalid spouse tax offset is for taxpayers with a dependent spouse who is unable to work because of invalidity.  An invalid spouse is a person who receives an approved disability or special needs support pension or has been certified as unable to work.

What is an “invalid spouse”

For definitions and further information about the Invalid and Carer Tax Offset go here.

Further Age Restriction – From 1 July 2012
(2012-13)

Under legislation passed in the June 2012 Federal Parliamentary session, the availability of the dependant spouse offset is further restricted to dependent spouses born before 1 July 1952, with effect from the 2012-13 tax year.

The intention is that the dependent spouse tax offset will be gradually phased out as the population ages.

Invalid and Carer exclusions to remain: A dependent spouse born on or after 1 July 1952 who is an invalid, permanently unable to work or providing care, will remain entitled to claim an amount equivalent to the dependent spouse.  Income tests will remain.