Newly elected Nationals leader Matt Canavan has proposed allowing couples with dependent children to split their income for tax purposes.

In simple terms, the total income of a couple could be divided between both parents before calculating tax. Similar structures already exist internationally, such as in France and Germany.

Supporters say the change would make the tax system more “family-friendly”, by recognising that many families share resources and financial responsibilities. They also say the current system can disadvantage households in which one parent temporarily leaves the workforce to care for children.

Critics say it could reinforce an outdated “male breadwinner” model and reduce incentives for women to participate in paid work.

Understanding the debate requires looking at how income splitting works and where it already exists.

What is income splitting?

Income splitting refers to arrangements where income that might otherwise be earned by one person is distributed across multiple taxpayers, typically within a family.

This matters because Australia taxes people using progressive income tax rates. As income rises, the tax rate applied to the upper part of their income increases.

Spreading income across more than one person can therefore reduce the total tax paid by a household.

For example, an Australian resident taxpayer earning A$200,000 a year pays a higher proportion of tax than if that........

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