Life change - Single income vs Split Income

[wally]

I was just plugging some numbers into ato calculators.
It would seem that a split income family is much better off in terms of nett income.

Family 1
Partner 1 - $120000 base Tax=$32167 Nett=$87833
Partner 2 - Stay at home (2kids)

Family 2
Partner 1 - $60000 base Tax=$11000 Nett combined=$98000
Partner 2 - $60000 base Tax=$11000

Family 1+
Partner 1 - $145000 base (Some overtime) Tax=$41597 Nett=$103403
Partner 2 - Stay at home (2kids)

Are these numbers correct?
It would seem, i am better off giving up the corporate job, and being self employed, even after some overtime still not much difference.

I havent included super (that would be a benefit of corporate job), also partner2 could get up to $18,000 tax free job... but still the numbers look compelling to get out of the big companies
I should explain the corporate job largely involves 10pm-2am high stress work on weekends which after 15 years and now young family is not appealing...

Self employed prospect, is pretty much guaranteed work. Fathers business that he will be retiring from soonish.. (7am-4pm work)

 

[jclegg]

For family 2 you forgot to factor in childcare costs depending on the ages of the kids, so Mum can go to work

Money isn't everything For us it was a lifestyle decision. Certainly we earned more when I worked but life was so much busier and stressful. You do what you have to do for your family but if a chance comes along to improve your lifestyle take it!

 

[wally]

Child care costs arent a concern here.
My point was the difference in tax treatment for the same family combined income, seems better off with "split" income family rather than one earner and one stay at home.
Doesnt seem fair.

 

[knightm]

Doesnt seem fair.

The system is what it is. Fair doesnt seem to be a relevant concept. We decided to have my wife at home for last 8 yrs to raise the babies and once they started pre school we have been paying through the nose for our fees compared to working couple friends because no ccr.

Looking forward to private school fees, they are less for 5dpw than what we pay for 2 now

 

[Terry_w]

Yes, that is basically correct - though I haven't checked your figures, but 2 people earning $50k each would pay less tax than 1 person earning $100,000.

Some points:

• -

You are assuming that being self employed allows your to divert income. It may in some instances, but not always.

• -

There are other ways to skin this cat, depending on your circumstances.

 

[wally]

So i would be silly to not adjust to the system then...
and leave the high paying job.
Earn similar amount self employed combined family income (and wife becomes an equal worker in the business)...

 

[Terry_w]

So i would be silly to not adjust to the system then...
and leave the high paying job.
Earn similar amount self employed combined family income (and wife becomes an equal worker in the business)...

If you think you could make similar money then it may be worthwhile. Being self employed has other advantages as well - you do what you want!

 

[Aaron_C]

Being self employed has other advantages as well - you do what you want!

...and weekends tend to merge into weekdays

 

[Jamie M]

...and weekends tend to merge into weekdays

This is one of the biggest pros of being self employed in my opinion.

Back in my PAYG days I used to dread Sunday evenings - it meant one more sleep before heading back to the 9-5 grind for another week.

Now it doesn't bother me one bit. I have the opposite problem now - I have to force myself to have a break from work and maintain some balance.

Cheers

Jamie

 

[wally]

...and weekends tend to merge into weekdays

I have this problem right now

 

[westminster]

I was just plugging some numbers into ato calculators.
It would seem that a split income family is much better off in terms of nett income.

Family 1
Partner 1 - $120000 base Tax=$32167 Nett=$87833
Partner 2 - Stay at home (2kids)

Family 2
Partner 1 - $60000 base Tax=$11000 Nett combined=$98000
Partner 2 - $60000 base Tax=$11000

Family 1+
Partner 1 - $145000 base (Some overtime) Tax=$41597 Nett=$103403
Partner 2 - Stay at home (2kids)

Are these numbers correct?
It would seem, i am better off giving up the corporate job, and being self employed, even after some overtime still not much difference.

I havent included super (that would be a benefit of corporate job), also partner2 could get up to $18,000 tax free job... but still the numbers look compelling to get out of the big companies
I should explain the corporate job largely involves 10pm-2am high stress work on weekends which after 15 years and now young family is not appealing...

Self employed prospect, is pretty much guaranteed work. Fathers business that he will be retiring from soonish.. (7am-4pm work)

Yes you are better off if you can both take advantage of the tax free threshold in scenario 2. But only works if you can structure the business so that your wife is employed by the business. I'm assuming that is what you are alluding too - splitting your income over 2 people?
If she can do the work (or be seen to do the work ) outside of your working hours then you won't need the child care costs that most couples have when both of them work.

 

[wylie]

Yes you are better off if you can both take advantage of the tax free threshold in scenario 2. But only works if you can structure the business so that your wife is employed by the business. I'm assuming that is what you are alluding too - splitting your income over 2 people?
If she can do the work (or be seen to do the work ) outside of your working hours then you won't need the child care costs that most couples have when both of them work.

I know years ago a family that employed several family members, none of whom seemed to go near the work premises .

 

[sanj]

Yes you are better off if you can both take advantage of the tax free threshold in scenario 2. But only works if you can structure the business so that your wife is employed by the business. I'm assuming that is what you are alluding too - splitting your income over 2 people?
If she can do the work (or be seen to do the work ) outside of your working hours then you won't need the child care costs that most couples have when both of them work.

She could be paid via dividends, there's no need for her to be working in the business