Whose name should the investments be in? A quiet but valuable retiree question

Australian tax is individual. Every adult has their own tax-free threshold — currently $18,200 (ATO, https://www.ato.gov.au/tax-rates-and-codes/tax-rates-australian-residents) — their own access to the Seniors and Pensioners Tax Offset (SAPTO) and the Low Income Tax Offset (LITO), and their own marginal-rate brackets. For a retired couple, that means whose name an investment is held in determines who pays tax on the income it produces — and for many couples there is a real gap between the spouses' marginal positions, with one still receiving employment income or a taxable defined-benefit pension and the other having little taxable income at all. Putting income-producing investments — term deposits, shares, managed funds, exchange-traded funds — in the lower-tax spouse's sole name shifts that income from a higher rate to a lower (often zero) rate, sometimes saving thousands a year. There is an important catch: transferring existing investments between spouses is a Capital Gains Tax (CGT) event at market value, with no general spouse rollover outside relationship breakdowns, so the strategy is cleanest when applied to new money — new accounts, new contributions, inheritances, windfalls — rather than wholesale restructuring of existing holdings. And one common misconception to head off early: this is a tax strategy, not an Age Pension strategy. For Centrelink, couples are assessed on their combined assets and income, so the name on an investment doesn't change the pension assessment one cent.

Where does the opportunity come from?

Because each spouse files their own return, income is taxed in the hands of whoever owns the asset producing it. With the tax-free threshold at $18,200 and the senior offsets layered on top, a senior with no other income can receive several thousand dollars more of investment income before paying any tax at all — for a SAPTO-eligible single, the effective tax-free threshold sits at around $35,000 once the maximum SAPTO of $2,230 and the LITO are taken into account (ATO, https://www.ato.gov.au/individuals-and-families/income-deductions-offsets-and-records/tax-offsets/seniors-and-pensioners-tax-offset). Above that, marginal rates climb — 16 cents in the dollar from $18,201 to $45,000, then 30 cents from $45,001 to $135,000 (ATO, https://www.ato.gov.au/tax-rates-and-codes/tax-rates-australian-residents). So a dollar of interest in the hands of a spouse on a 30% marginal rate costs around 30 cents more in tax than the same dollar in the hands of a spouse below the offsets. Across a long retirement and a meaningful investment balance, the cumulative difference adds up fast.

How do joint accounts split income for tax?

Joint accounts split the income 50/50 for tax, whether you want them to or not, and that surprises many couples — they assume they have flexibility, when in fact joint bank and broker accounts attribute income and capital gains 50/50 between the holders regardless of who contributed the money. If income-splitting is the goal, sole ownership in the lower-tax spouse's name is what captures it. For real property, the difference between joint tenants (with right of survivorship — when the first dies, the other automatically owns the lot) and tenants in common (defined shares, each spouse able to leave their share via the will) also matters: tenants in common with weighted percentages can route income deliberately, while joint tenancy forces the 50/50 split.

Why is "just put it in my wife's name" a CGT trap?

Transferring an investment between spouses is a CGT event at market value — even though no money changes hands — because when you give an asset away you are taken to have received its market value (ATO, https://www.ato.gov.au/individuals-and-families/investments-and-assets/capital-gains-tax/calculating-your-cgt/capital-proceeds-from-disposing-of-assets), and there is no general spouse rollover for routine transfers. (The CGT rollover for transfers between spouses exists only on court-ordered or binding-financial-agreement transfers during a relationship breakdown, not for ordinary estate planning between intact couples.) So re-titling a long-held share portfolio from one spouse to the other can trigger a substantial capital gains tax bill, often eating up many years of future income-splitting savings before they have even started. The clean playbook is to apply the strategy forward: open new accounts in the lower-tax spouse's sole name, direct new investments, dividend-reinvestment top-ups, inheritances, and windfalls there, and leave existing positions alone unless the maths genuinely justifies the CGT cost — which it sometimes does, since small embedded gains paired with large income streams can be a case for it, but it needs to be checked, not assumed.

What's the Centrelink point?

It is worth being clear on the Centrelink point. For the Age Pension assets and income tests, a couple's combined assets and combined income are assessed (Services Australia, https://www.servicesaustralia.gov.au/assets-test-for-age-pension), so putting investments in one spouse's name rather than the other does not change the pension. This is a personal-tax strategy. The Centrelink-side levers for couples are different — keeping wealth in a younger spouse's accumulation super (where it is exempt from Centrelink until they reach Age Pension age), evening up super balances via contribution splitting, or converting assessable assets into the exempt family home — all covered elsewhere. Don't conflate the two: people sometimes hear "put it in your wife's name" and expect both a tax win and a pension boost. They only get the first one.

What practical considerations matter beyond tax?

The practical considerations beyond tax matter too. Sole-owned assets pass through the will, not by survivorship, so if a meaningful portion of the couple's wealth shifts into one spouse's sole name, the wills should be reviewed to make sure the intended path is preserved. Capacity is worth thinking about: if the lower-tax spouse is more likely to face cognitive decline, an enduring power of attorney should be in place so the other spouse can manage the assets if needed. And source-of-funds discipline matters — accounts opened in one spouse's name should be funded from that spouse's resources or from clearly documented joint funds, with the income returned in that spouse's name; for ordinary spousal arrangements this isn't a hard requirement, but a tidy paper trail avoids questions later. Finally, revisit the arrangement if circumstances change — if the lower-tax spouse later starts a taxable income stream or inherits a large taxable position, the optimum may swing, though reversing the strategy means another CGT event, so the timing of decisions itself matters.

What does the ownership decision look like in practice?

These two cases show the ownership question. They are illustrative only and not personal advice.

Phyllis and Thaddeus are both 70. Thaddeus still draws a taxable defined-benefit public-sector pension above the offset threshold, putting him on roughly a 30% marginal rate, while Phyllis has no taxable income at all. They have just inherited $250,000 and are about to put it in a joint term deposit, as they do with everything. On these facts, a joint deposit would split the interest 50/50 — half taxed in Thaddeus's hands at his marginal rate, half in Phyllis's at zero. On these facts it is generally rational to open the term deposit, and any subsequent investments, in Phyllis's sole name. At, say, a $12,500 annual interest yield on the $250,000, that shifts roughly $6,250 of interest from Thaddeus's 30% bracket to Phyllis's effective 0% rate (ATO, https://www.ato.gov.au/tax-rates-and-codes/tax-rates-australian-residents) — a saving of around $1,800 to $2,000 a year, year after year, with no CGT cost because the money was never in either name before the inheritance landed. The supporting work is to make sure Phyllis's will reflects the new shape of her assets, to check that the enduring power of attorney arrangements cover both directions, and to default any subsequent new investments to her sole name as well. A clean, cost-free win, captured at the moment the money first comes into the household.

Imogen and Cassius, both 68, have a long-held share portfolio worth about $400,000 held in Cassius's sole name from before they were married, sitting on roughly $150,000 of unrealised capital gains. Their accountant has casually suggested "transferring half to Imogen to even up the tax". Cassius is on a 30% marginal rate; Imogen has very little taxable income. On these facts, the casual suggestion is dangerous. Transferring half the portfolio to Imogen is a CGT event at market value (ATO, https://www.ato.gov.au/individuals-and-families/investments-and-assets/capital-gains-tax/calculating-your-cgt/capital-proceeds-from-disposing-of-assets) — Cassius would realise roughly $75,000 of capital gains and, after the 50% CGT discount, pay tax on about $37,500 at 30%, some $11,250 of CGT in the year of transfer. The future tax saving — perhaps $1,500 to $2,000 a year of dividends shifted from his 30% bracket to her effective 0% — would take five to seven years of income-splitting just to recover the CGT cost, with no other benefit in the meantime. On these facts the cleaner strategy is to leave the existing portfolio in Cassius's name and direct all future new money — redirected dividend reinvestment, inheritances, sale proceeds from other assets — into a new portfolio in Imogen's sole name. Over time, the new portfolio in her name grows while the old one in his stays put, capturing the income-splitting benefit without paying for it in CGT. The accountant's instinct was right; the execution would have been expensive.

For retired couples managing investments outside super, the name on the account is a quietly important decision. The work is to compare the two spouses' effective tax positions (and only act where there is a meaningful gap), to default new money — new accounts, top-ups, inheritances, windfalls — to the lower-tax spouse's sole name at the moment of acquisition, to leave existing investments alone unless a deliberate CGT-versus-future-income calculation supports a restructure, to use joint, tenants-in-common, or sole ownership deliberately (joint forces 50/50, tenants in common allows weighted splits, sole captures the strategy), to be clear-eyed that this is a tax strategy and not a Centrelink one, and to align the wills and enduring power of attorney arrangements with the new ownership pattern. The headline is simple: Australia taxes individuals, and the choice of whose name an investment is in directly determines who pays the tax on the income it produces. Get it right on the way in and the saving is free; get it wrong and trying to fix it after the fact often costs more than it saves. Confirm the current tax-free threshold, SAPTO and LITO thresholds, marginal rates, and any state stamp duty considerations before relying on the numbers — but the shape of the decision is durable.

Sources

• ATO — Tax rates: Australian residents
• ATO — Seniors and pensioners tax offset (SAPTO)
• ATO — Capital proceeds from disposing of assets (transfers between spouses)
• Services Australia — Assets test for Age Pension (couples assessed jointly)