Expert reveals tax benefits as Aussie couple refuse to join bank accounts - even after 8 years and 2 kids

It's a question many couples grapple with - to combine finances or not? After eight years and two kids, Loviner and Brad have got this common source of domestic dispute well and truly figured out.

The couple have only ever had separate bank transaction accounts. They both contribute proportionately to their respective incomes to pay down their home loan.

Any remaining individual income goes straight into their individual accounts.

A financial expert has weighed in on their approach and shared some of the pros and cons of keeping bank accounts separate, revealing to Yahoo Finance that it can be the fiscally beneficial path when it comes to tax time.

They contribute equally to household expenses - groceries, childcare and bills - from those separate accounts. They then pay for their own personal expenses, other than Brad paying all the car costs, since he’s the main user because of his work as an electrician.

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What may surprise some is the couple have adopted this approach even though Brad makes “significantly” more money than Loviner, who works casually as a social worker and looks after their Airbnb. She said Brad still earns “at least double” what she does.

“I’m quite proud. So I like to pay my way,” Loviner said. “Not just leave it to Brad to earn the money and pay for all the bills. I’ve always worked hard. I’m a great saver.”

She’s also fine with Brad enjoying the odd motorcycle trip and lotto ticket. “That’s his money, so he can spend what he wants. But he’s pretty good. He doesn’t splurge.”

The Wollongong couple keep things reasonably flexible. “Sometimes if the kids are sick then I can’t go to work," Loviner said. “And as a casual worker, you don’t get all the benefits you would as a permanent.”

“Brad has always said if I'm short or if I didn't earn much that week that he would transfer me money whatever I needed. I don't go overboard to ask for a lot. Just enough to cover my expenses, which is really my set amount that I transfer to the mortgage every fortnight, phone bill, groceries [and] house insurance.”

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Joint savings vs offset account: How best for couples to bank

Brad and Loviner do share an offset account to pay down their mortgage, and it’s one reason she said they’ve never bothered with a joint savings account.

Andrew Wong from Alchemy Wealth said an offset account makes sense for younger homeowners with a substantial mortgage balance compared to older Australians.

“It would be more sensible that they have their money, more often than not, in the offset account versus in a savings account,” Wong told Yahoo Finance.

Slash tax bill with separate savings accounts

Everyone is looking to reduce the amount of money they hand over at tax time and Wong said dividing savings strategically could help.

This can be done by putting the majority into the account holder of the person who has the lowest tax rate.

He gave the simplified example of a stay-at-home parent with no income and their spouse who might be on the top marginal tax rate of 47 per cent.

If the couple had $100,000 to put into a savings account paying five per cent interest, Wong said they could save $1,200 in tax by putting it into the stay-at-home parent’s account.

If it were in a join account, half would be taxed at the top marginal tax rate.

Wong warned these moves might not be right for everyone, particularly if it means handing over large sums of money.

He said there's often a difference between the "optimal financial outcome" and what's best for you.

"Is it going to be the right outcome? I guarantee you nine times out of 10, it’s not going to be. It could lead to discord and unease and unhappiness [in the relationship].”

For retirees, there's a potentially uncomfortable but practical conversation to be had about a partner's death (and the surviving partner's ability to access money".

He said this is a “a very powerful reason to be using joint accounts”.

“It might depend on the banks and their policies whether the surviving spouse could access part of that, or all of that. And then we start thinking about getting a grant of probate from the courts,
he said.

"Speaking from the New South Wales perspective, that exercise in itself could take up to three or four months.”

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