Later, the family heads to the local RSL for breakfast. Outside, a crowd gathers around a chalk circle. Coins spin through the air as adults laugh and cheer. It's two-up, the one day of the year it's legal. "Just a bit of fun," his dad says, handing over a gold coin.

On the way to the shops, he passes a newsagency. Posters advertise Powerball jackpots. A digital billboard flashes: Win $20 million this Thursday.

Back home, Carlos watches the ANZAC Day AFL match with his older brother. The commentators talk about odds and multi-bets. Logos for gambling companies flash across the screen. Carlos cheers when the Bombers score. His brother doesn't, his bets have already lost. After lunch, Carlos plays a free iPad game. He's prompted to buy a 'loot box' for a chance at a rare skin. The spinning wheel looks like Mum's scratchies. He doesn't realise it, but he's engaging in simulated gambling. 

That night, the family watches a quiz show. During the ad break, a betting company commercial blares its catchy tune. Carlos hums it while brushing his teeth. 

By bedtime, he's encountered gambling seven times - a lucky number for some. It's woven into his entertainment, his community, his games and his family's traditions. 

For Carlos and millions of children like him, it's just another day in Australia.

Teenagers are gambling more than they're playing sport

Almost one million Australians aged 12 to 19 gambled in the past year - more than the number who played cricket, soccer, basketball or footy. That's one in three teenagers, enough to fill the MCG nine times over, according to The Australia Institute. Together, they wagered an estimated $231 million, despite the legal gambling age being 18.

Among 18- to 19-year-olds, nearly half gamble regularly and many carry those habits into adulthood. "We've allowed gambling to get to the point that Aussie kids think it's normal to discuss betting odds when they talk about the footy," says Morgan Harrington, research manager at The Australia Institute.

Public Health Association Australia (PHAA) warns that young people are five times more likely than adults to develop gambling problems. Between 3%-4% of young gamblers already show signs of addiction or are at serious risk.

"Like Big Tobacco, the gambling industry knows if it can get kids hooked, it has a pipeline of customers for life," says Ebony Bennett, The Australia Institute's deputy director.

Australians lose more to gambling per head than anyone else on earth - more than $31.5 billion per year, according to the PHAA. That's more than $1000 per person, more than gamblers lose in Las Vegas. The losses aren't just financial.

"They drive mental illness, domestic violence, family breakdown, housing stress, self-harm and potentially suicide," the PHAA said in July 2025. 
Harrington says this didn't happen overnight.

"It's because of the proliferation of sports betting apps and the advertising for them, which has become just about impossible to avoid," he says.

"These technologies simply weren't available 10 or 15 years ago and the government isn't doing enough 
to restrict use to adults."

The government has known this for some time. In June 2023, a Federal inquiry into online gambling delivered a landmark report - You Win Some, You Lose More. This became known as the Murphy Report, led by the late Labor MP Peta Murphy. It sets out 31 urgent reforms, including a ban on gambling ads during live sports and stricter identity checks for online betting. Two years later, most remain untouched.

Harrington says it comes down to political will.

"We don't see ads for cigarettes anymore and no one thinks that is strange, yet you can't watch a sports match in this country without seeing gambling ads."

The Murphy Report had bipartisan support, but its recommendations stalled.

Betting logos still dominate broadcasts; gambling apps still target young people; the same digital spaces where children watch videos or play games are saturated with gambling cues. "So far, the government seems more willing to side with the gambling industry than Australians affected by gambling," he adds.

How Australian children are gambling

"The impacts of gambling on the young generation will be everlasting ... My son fell into the trap after having a couple of wins. Those wins turned into losses and those losses are then chased until there is nothing left but tears and depression," reads one submission to the Murphy Report.

Gambling isn't one activity but a spectrum of risky behaviours, some far easier for kids to access than others.

Anne Hollonds, director of the Australian Institute of Family Studies (AIFS), says that while most 16-17-year-olds don't gamble, "a significant number do. One in five boys and one in eight girls reported spending money on at least one gambling activity within a year," she says.

"The most common form was private betting with friends or family - cards, mah-jong - activities that have no legal age restrictions." More concerning, about 5% of teens reported betting on sports, horse racing or greyhounds, all restricted forms.

Kids at the pokies 

Poker machines aren't how most children first experience gambling, but they're often where problem gamblers end up. NSW has the highest concentration of pokies outside Las Vegas, with about 90,000 machines, roughly one for every 88 people.

In 2022-23, Australians lost $15.8 billion on pokies, more than half in NSW alone, up 7.6% from pre-COVIDpandemic levels. Among 18-34-year-olds who regularly play poker machines, more than four in five are classified as high risk. Most also gamble elsewhere: 81% buy lotto tickets, 67% scratchies, 62% bet on racing and 56% on sports.

Australia has less than 1% of the world's population but 18% of its poker machines, according to The Guardian. Most global machines are inside casinos; in Australia, three-quarters sit in pubs and clubs.

Unsurprisingly, the world's biggest pokie maker, Aristocrat, is Australian. But what is surprising is that morethan 69,000 12-17-year-olds have used poker machines in the past year, despite ID checks, according to The Australia Institute.

The rise and reach of online gambling 

Online gambling may still cause less total harm than pokies, but it's catching up fast and reaching younger Australians in ways pokies never could. Australians who gamble online are twice as likely to experience harm as those who gamble in person (34% to 15%), according to the Murphy Report.

The COVID lockdowns accelerated the trend. With pubs closed and people isolated, gambling companies filled the void.

"Many people withdrew their superannuation and gambled much of it," Financial Counselling Australia told parliament. "The industry bombarded Australians with marketing. It was the perfect storm for gambling harm."

National spending on online gambling jumped from $5.6 billion in 2019 to $9.6 billion in 2022 - a 72% surge.

Morgan Harrington wrote in The New Daily that "free-to-air TV alone airs more than one million ads a year, not counting the torrent online".

"If 85% of 12-17-year-olds have seen a gambling ad on TV in the past month, is it any wonder young people talk about betting odds like they once did player stats?"

Speaking to Money, he says there's no single fix, but implementing the Murphy Report's recommendations, "would be a good start".

"The fact that there is no Federal regulator simply has to change," he says.

The report called for a national gambling regulator, a minister for harm reduction and an ombudsman to handle complaints.

Three quarters of Australians support a total ad ban within three years, and more than four in five want gambling ads gone from social media, stadiums and uniforms.

On one of those points, the public may get their wish.

Since December 10, platforms such as Instagram, TikTok and Snapchat must block under-16s - a policy that may indirectly reduce gambling exposure. YouTube, initially exempt, is now included.

But experts warn gambling promos will still slip through via sport, streaming and other platforms.

Power of the gambling lobby

Movement on the Murphy Report's recommendations appears unlikely for now.

In August 2024, The Sydney Morning Herald reported that Prime Minister Anthony Albanese shelved a proposed ban on gambling ads under pressure from media networks and sporting codes ahead of the Federal election.

The timing raised eyebrows. Analysis by Reuters revealed that MPs accepted $245,000 in free tickets to sporting events while the ad ban was under consideration. Albanese received $29,000 in tickets, mostly to Rabbitohs games and grand finals, while then Opposition Leader Peter Dutton accepted $21,350 worth.

Australia's professional sporting codes have a financial stake in the gambling industry, which pours millions into sponsorships. Political donations are also common. A 2021 ABC investigation found gambling-linked donors made more than $80 million in political payments between 1998 and 2020.

Even raising concerns can come at a cost. In October, independent senator David Pocock was removed from the Australian Parliament Sports Club - a social group for politicians and journalists (and lobbyists) - after objecting to a gambling lobby group being a paid member.

The Public Health Association of Australia PHAA) is calling for reform, including a ban on political donations from gambling operators and a 1% turnover levy to fund harm-reduction services.

Until such measures are introduced, critics argue Australia will continue to treat gambling as a commercial opportunity rather than a public health issue - leaving the house and its lobbyists, firmly in control.

When gaming becomes gambling

Younger children now face gambling cues not just in ads or sports, but inside the games they play. A September study found simulated gambling in games aimed at kids as young as four.

Many of these games use 'loot boxes' or 'gacha' systems, digital lucky dips where players spend real money for a chance at rare virtual prizes. The flashing lights, suspenseful spins and near-misses mimic the psychology of slot machines.

These features "may function as a gateway to gambling-related harm", warn researchers from the City University of Hong Kong and The University of Sydney.

To get ahead of this, Australia introduced new age ratings for games with gambling-like content in September 2024.

Titles with chance-based purchases must carry at least an M rating, while games that simulate gambling, such as casino or betting apps, must be R18+. Yet out of the top 100 grossing mobile games, researchers found 20 on the App Store and 48 on Google Play that didn't comply.

"Several games with these features still carry ratings below what the law requires," says researcher Leon Xiao.

The team also uncovered wild inconsistencies. Of 31 games with gambling-like content, 30 had conflicting age ratings - some showing four different ratings at once.

Gardenscapes was rated G on Google Play, 4+ on Apple, 16+ in its privacy policy and 16+ with parental permission in its terms.

Dice Dreams was listed as 4+ on Apple, M on Google Play and 15+ under Australian classification - yet its developer admitted it was "intended for those 18 and older."

For parents, that means there's no consistent guide to what's appropriate. Xiao says confusion stems from poor communication. The rules, which took effect on September 22, 2024, also apply to older games that add or alter loot boxes, but many still display outdated ratings.

"The relevant minister arguably misled the industry by declaring that the rules do not apply 'retroactively', even though they clearly do apply to previously released games that are substantively updated," he says.

He adds that the Australian Classification Board only released compliance guidance a week before the law took effect. "That gave the industry very little time to react."

How games are designed to keep kids playing

"Gambling-like elements are designed to make video games addictive," says Morgan Harrington, from The Australia Institute.

"They normalise gambling behaviour, which can become a problem as kids grow up."

Parents and carers, he says, need to understand the risks in the games children play. Parents have long relied on Australia's film and TV ratings to judge what's suitable for kids. Those systems aren't perfect, but at least they're consistent. Gambling, too, is tightly controlled: betting apps must verify ages, and casinos can't let minors through the door.

Yet the study suggests the same consistency doesn't extend to mobile games. A spokesperson for the Department of Infrastructure, Transport, Regional Development, Communications, Sport and the Arts told Money the updated classifications are "designed to help Australians make informed choices", and encouraged people to check ratings at classification.gov.au.

"The government is continuing to work on broader reforms to the National Classification Scheme to ensure it remains a trusted and relevant source of information for Australians when deciding what to watch, read and play," the spokesperson said.

The classification board vows to work with publishers and platforms to improve compliance, with enforcement handled by State and Territory authorities. Public consultation on updated classification guidelines is expected next year.

The Roblox test

Roblox and Minecraft weren't part of the study but were tested separately due to their popularity.

Both are 'sandbox' games where players create their own worlds and minigames, making regulation near impossible.

Roblox alone has about 350 million users, 40% of them are younger than 13. Loot boxes and paid random-reward items remain widespread.

When researchers created a 12-year-old's account, they were immediately prompted to buy a $5 'starter pack' containing a random 'royal egg'.

Later, the same account entered Hotel Elephant, a player-made casino with a functioning poker machine that accepted Robux, Roblox's currency that can be purchased with real money. That, they argue, warrants an R18+ classification for Hotel Elephant, and by extension, Roblox itself.

Mislabelling games is illegal under Australian law, but penalties are weak: the maximum fine is only $6000.

"Given Roblox has a yearly revenue of $5.8 billion, it is reasonable to expect it to moderate its platform to protect child users and ensure compliance with Australian legislation," the study concluded.

Where to get help with gambling

• Gambler's Anonymous: 130 meetings weekly, free membership
• Gambler's Help: Under-25 service, 24/7 support - 1800 262 376
• Gambling Help Line: 24/7 chat and counselling - 1800 858 858
• Lifeline: 13 11 14
• MensLine: 1300 789 978
• Beyond Blue: 1300 224 636

When your washing machine packs it in or your toaster dies two months after purchase, Australian Consumer Law (ACL) is clear: you are entitled to a remedy.

Why is it then that thousands of Australians walk away empty-handed?

How hard is it to lodge a consumer complaint?

In 2023, the Australian Competition & Consumer  Commission (ACCC) logged more than 28,000 complaints about returns and refunds - nearly a third of reports received. Cars, electronics and whitegoods dominated the list.

About a third of these consumers didn't have their problem fixed. And of the 69% who did, a third were not satisfied with the outcome.

An ACCC sweep of 2000 retail websites in early 2025 revealed the kinds of terms shoppers face:
• Sale items cannot be returned.
• Opened products cannot be exchanged.
• Notify us within 30 days for a replacement.

These statements are flagrant violations of the ACL's consumer guarantees - basic rights that apply to every product or service sold in Australia.

But that's cold comfort when you're standing in-store arguing with a junior employee reading off a laminated sign.

"Sorry, that's our policy... buyer beware, dude." Kick up a stink and you'll likely be bounced between managers, on-hold queues and email addresses that never reply.

As Chandni Gupta from the Consumer Policy Research Centre (CPRC) points out, protections that exist only on paper are "deeply unfair", leaving Australians to fight through a maze of bureaucracy.

A joint CPRC and the Consumer Action Law Centre report found lodging a complaint about a faulty car can involve up to 60 steps - and that's if everything goes smoothly.

Gupta says the reality is that "Australians are unlikely to pursue their rights under consumer guarantees as the administrative burden sits solely on them".

Why wasn't the law working for consumers?

The ACL came into force in 2011, billed as a major step forward in protecting buyers. For the following decade, government and industry finetuned the framework, but the gap between guarantees on paper and guaranteed outcomes in practice only widened.

As Assistant Minister for Treasury Andrew Leigh recently wrote in The Canberra Times, "rights without consequences are just suggestions".

The 2016 Consumer Survey laid bare the problem: most people tried to resolve issues themselves, but only 36% succeeded on first contact.

On average, consumers spent 22.6 hours a year - worth about $655 of their time - chasing problems, plus another $299 in out-of-pocket costs such as legal advice or technical reports. In some cases, tribunals demanded expert evidence before even hearing a case.

For low-value goods - a $40 toaster, a $60 pair of headphones - it was usually cheaper to give up than to fight.

By 2021, Treasury conceded the system only works if consumers know and assert their rights and businesses are compelled to meet their obligations. Australians agreed. A 2022 CHOICE survey of nearly 10,000 people found 99.6% believed businesses should be penalised when they fail to provide a refund, repair or replacement under the ACL. But reform takes time.

Two years later, Treasury released a consultation paper on penalties for businesses that flout their  obligations. By December, consumer affairs ministers had agreed to make prohibitions and penalties a 2025 policy priority.

What's changing in consumer protection laws?

The ACCC has long pushed for stronger enforcement of consumer guarantees. At present, the watchdog can issue warning letters and, in some cases, negotiate tailored penalties with individual businesses.

While the ACCC says its methods do improve compliance, it's a patch-up job. Without penalties written into law, the regulator is forced to craft bespoke fixes rather than wield a blunt instrument that applies across the board. That's why consumer groups argue that the law 'has no teeth'.

"This allows businesses to give people the runaround, exploit consumer anxiety and sell poor-value extended warranties that give the consumer access to remedies they may already have a right to under the law," says Andy Kelly from CHOICE.

The CPRC's Gupta calls it a blind spot. "Reforming consumer guarantees so that a regulator can enforce directly will help address a major gap in the ACL."

Government agrees. Assistant Minister Andrew Leigh says Australians expect products and services to work as promised, and when they don't, the supplier should fix the problem.

"That's why we are taking action to strengthen consumer guarantee protections for consumers and small businesses and introducing civil penalties for breaches - so that rights come with real consequences."

On this point, there's rare consensus: shoppers, regulators, consumer advocates, legal experts, ministers and Treasury all want penalties. The sticking point, yet again, is timing. Treasury is still working through the 2024 consultation.

Next comes a decision regulation impact statement, weighing the evidence and recommending a preferred policy option.

Proposed amendments must then win the support of State and Territory consumer affairs ministers, before draft legislation is developed and released for public consultation. Only after that can a Bill make its way to parliament. In other words, everybody wants reform; but it's not likely to happen anytime soon.

What are your rights under Australian Consumer Law?

If a product or service doesn't meet one of the consumer guarantees, you're entitled to a remedy.

That might mean a repair, replacement, refund, cancellation or compensation for damages or loss. Your first step is always to contact the business that sold you the product or service.

ACL says the business can't simply tell you to chase the manufacturer, except where the issue is that spare parts or repair facilities are no longer available within a reasonable time.

If the business refuses to help, there are other options. Each State and Territory has a consumer affairs agency, such as NSW Fair Trading, Consumer Affairs Victoria, Access Canberra or WA Consumer Protection - that can step in. Industry ombudsmen, including the Telecommunications Industry Ombudsman and the Australian Financial Complaints Authority, also offer free dispute resolution. If that fails, legal avenues are available.

Each State has small claims courts or tribunals that hear consumer and fair-trading disputes, and you can seek advice through community legal centres or State-based legal services before proceeding.

CHOICE recommends keeping a written record of all complaints, while the CPRC urges consumers to report retailers to regulators.

"Every report adds weight and evidence, making it harder for the government to ignore the case for change," says Gupta.

That evidence has shaped and is shaping the policy debate. Without it, Australia may not have had consumer guarantees to begin with.

As Minister Leigh told The Canberra Times, since 2011, protections have expanded: unfair contract terms are now banned, consumer guarantees are better enforced and regulators have more tools to hold businesses to account.

"But markets don't stand still, and nor can our laws," said Minister Leigh.

Progress may be slow but by consumers knowing their rights, asserting them and adding their voice, it will move in the right direction - eventually.

The allure is obvious: mass-produced pieces mimicking the designer runways of Paris ordered with a tap and delivered within days at a fraction of the price.

This might seem like just another internet fad or a way to democratise fashion - a continuation of the 'dupe' culture where consumers opt for cheap knockoffs of luxury items. But what's the real cost of this hyper-consumption?

How much is Australia spending on fast fashion?

Australia buys more clothes per person than any country in the world, even more than the US, according to The Australia Institute's Textiles Waste in Australia report.

Each year, Australians add close to 1.4 billion new garments to their wardrobes, averaging 56 new items per person - and most of it doesn't stay around for long.

About 200,000 tonnes of clothing are thrown away every year, about the weight of four Sydney Harbour bridges.

"The over-production of the fast fashion model means that billions of garments are never sold or worn," says Nina Gbor, director of circular economy and waste at The Australia Institute. "Many go straight to landfill or are incinerated."

When did shopping become entertainment?

The problem isn't just over-consumption, it's acceleration. Social media platforms, such as TikTok and Instagram, have turned shopping into entertainment. Reels tagged #GRWM (Get Ready With Me) or showing off hauls have normalised bulk buying for online engagement and likes.

Where fast fashion pioneers such as Zara and H&M took around a month to get runway looks into stores, ultra-fast players like Shein and Temu can design, produce and deliver items in just a week. According to The Australia Institute, Shein uploads up to 7200 new products daily.

As recent research from RMIT Australia puts it, "Having seven trending items over two high-quality outfits, makes more sense to Gen Z consumers in the digital age."

For a generation living much of their lives online, the need to constantly update their image can feel inescapable.

What about the cost of living crisis?

Cost-of-living pressures only make it worse. ASIC data found 82% of Australian Gen Zers, representing young people 18 to 26 years of age, feel financially stressed and have more personal debt than other generations.

For many, ultra-cheap fashion seems like the only way to stay current without blowing the budget.

But therein lies the cognitive dissonance; the attitude-behaviour gap that shows young people simultaneously care about the environment and contribute to fast fashion.

"There's this perception that young people are all about climate action and sustainability," says Gbor. "But when you look at the data, they're also the main demographic buying from ultra-fast fashion brands."

She's quick to clarify this isn't a criticism, but rather an observation of a generation caught between ideals and reality.

"At that age, you tend to do what the culture dictates, the trend. This is not to say they don't care about the environment - they do. But not enough to boycott or use their voice strongly in a meaningful, purposeful way. If they did, that would shift the status quo around ultra-fast fashion."

What is a fast fashion tax?

In June this year, France took a bold step to curb ultra-fast fashion. Its Senate backed landmark legislation targeting giants such as Shein and Temu, and the digital ecosystem that fuels them.

The proposed laws would give every item of clothing an eco score based on emissions, resource use and recyclability. Poorly rated items would cop escalating penalties: €5 ($8.91) per garment from 2025, rising to €10 ($17.82) or 50% of the retail price by 2030.

"That's critical, because these companies rely on highly targeted digital advertising and influencer marketing to move product," says Gbor. "If they can't show up in people's feeds, they won't sell."

In contrast, Australia has stopped short of any such tax or fast fashion ban. Gbor says we need it even more than France does. "Unlike France, which has an established fashion and textiles sector, our industry is still emerging. And many local Australian brands are struggling to stay open."

What is Australia's fashion stewardship scheme?

Last year, the Australia Institute called for stronger action.

Months later, the Federal government helped fund Seamless, Australia's first national stewardship scheme for clothing. Launched in July 2024, the program asks participating brands to pay a levy of 4 cents per garment (3 cents if they meet design standards aimed at recyclability).

The money funds better design, collection, reuse and disposal of garments in Australia. If 60% of the industry signs up, the scheme could raise $36 million annually, which could be used to promote a circular fashion economy.

One year in, Seamless chief executive Ainsley Simpson says progress is underway.

"Together with 56 responsible brands and over 120 supporting organisations, we've embraced action," she says. Founding members include Big W, Cotton On, David Jones, Lorna Jane, Rip Curl, R.M.Williams and The Iconic.

But critics say the scheme doesn't go far enough.

"Four cents per garment isn't sufficient," says Gbor. "Think about what happens after garments are collected - sorting, transporting, warehousing, decommissioning. That all requires significant infrastructure and labour. Even with volunteers, which shouldn't be the case, the levy falls short."

The Australia Institute recommends a 50-cent levy and that the scheme be mandatory.

"Corporations rarely uphold environmental standards without regulation. There's a lot of greenwashing in this space," she says.

Even Seamless concedes its voluntary model is a limitation. Its own website states: "Seamless has been designed as a voluntary scheme, which was the condition of the government funding ... However, feedback from industry and evidence from similar schemes around the world builds a compelling case for the introduction of co-regulation."

Minister for the Environment and Water Murray Watt backs the initiative but hasn't committed to tougher rules. "We continue to encourage the clothing industry to support the scheme."

In terms of a fast fashion tax, the Albanese government has so far avoided announcing any new measures, though Watt has his finger on the global pulse.

"Australia will be keenly watching international efforts to reduce fashion waste to see the results," he says.

"It's the responsibility of businesses, governments and consumers to work together to build a more sustainable industry and limit the extraordinary amount of textiles that end up in landfill every year," says Watt.

What is deinfluencing?

On that last point, Watt may be right: tackling fast fashion isn't the job of the government alone.

It's a shared responsibility between policymakers, industry and all of us who fill our wardrobes. But just as TikTok hauls fuel the churn, there are growing online movements pushing back.

The emergence of the underconsumption core on TikTok and the rise of de-influencing, where creators actively tell their followers to buy less, is reshaping what it means to be stylish.

According to RMIT researchers Marian Makkar and Amanda Spry, this shift presents a rare opportunity to flip the script on fast fashion.

"It is time to re-engage with social media content creators in different ways that educate consumers, promote responsible behaviour and advocate for changed regulations and business practices," they wrote.

"This might include tried-and-true tactics such as influencer endorsements and haul videos that are refocused on more sustainable options - like online second-hand retailers."

Gbor has been making this case for years.

"One of the biggest points of pushback I hear whenever fast fashion taxes are raised is, we're in a cost-of-living crisis - we can't afford alternatives. And I get it," she says.

"But I've personally avoided buying new clothes since I was 15, and I've been organising clothes swaps for about 14 years."

Gbor recommends these swap meets - which are free and organised within communities among friends, schools and workplaces.

"You can find great-quality items without spending a cent. Anyone can host or join one - and it's as simple as searching online for how to start one."

She also encourages learning simple repairs and rethinking how we use what we already own.

"Many local councils run workshops, and online tutorials are abundant. Learning how to fix and freshen up your wardrobe extends the life of your garments."

Gbor has run local workshops on how to 'restyle' - a method she teaches to help people creatively rework their wardrobes.

"It's all about finding fresh ways to wear your existing clothes through layering and accessorising ... It helps people fall back in love with what they have so boredom doesn't lead to buying."

Change starts with government and industry, but consumers aren't powerless. By buying less and reusing more, you can shift the story.

Next time you're at the online checkout, ask: 'Do I need this? Is it sustainable? Could I borrow, swap or repurpose instead?'

And if your feed is filled with Shein hauls, shift the algorithm by searching for sustainable trends instead.

Fortunately, super fund members older than 25 are automatically given a basic amount of default life cover. But here's the rub: it's up to the fund member to actively nominate who their beneficiaries are.

Superannuation isn't automatically part of your estate under Australian law. If you don't have a valid binding nomination in place, your super fund's trustee can decide how your death benefit - super plus insurance payout - should be distributed.

Generally, super can only be paid to a dependant or your legal personal representative (LPR) (the executor of your estate). Under super law a dependant is defined as a spouse or de facto spouse, your children and stepchildren, or someone you're in an interdependent relationship with. This means you can't nominate a friend or other relative.

If you want to leave your death benefit to someone who isn't a dependant, you need to make a binding nomination to have it paid to your LPR where it will be distributed, according to your will.

How binding and non-binding nominations work

If you make a non-binding nomination, the trustee will consider your nomination but it isn't legally binding.

If you have a valid binding death nomination in place on your account at time of death, the trustee is required by law to pay your nominated beneficiaries.

"It's not binding unless two people witness and sign it. If it's just a nomination, the trustee has the discretion whether to honour it or not," says Marisa Broome, a certified financial planner and principal of wealthadvice.com.au.

Your super fund should be able to help you find the relevant form. Once completed, you will need to have it witnessed and signed by two people.

When you make a binding nomination, you need to decide whether it should be a lapsing or non-lapsing nomination.

Why you should nominate a legal personal representative

Risk specialist, Sam Perera, director of Perera Crowther Financial Services, says superannuation fund trustees have a legal obligation to determine who is a dependant and how benefits should be paid.

"This can lead to delays or outcomes that differ from your informal wishes. By directing the funds to your legal personal representative (LPR), you remove this element of discretion, ensuring your specific instructions are followed."

He says there are two main reasons to nominate an LPR.

"You do not have a beneficiary who is a dependant, so you have no option but to nominate your LPR. Many younger Australians fall into this cohort as they may not have a spouse or children or anyone who 
is financially dependent on them or they may be in an interdependent relationship.

"In this instance you can have your death benefit paid to your estate where you can nominate friends and/or family members in your will to receive your fund bypassing the need for the money to be paid to a dependant.

Second, you have more complex estate-planning wishes, such as establishing a testamentary trust, and want your super benefits to form part of it.

"There are tax advantages of setting up a testamentary trust, which may be a significant driver of this strategy.

"If you have beneficiaries with disabilities or special needs who rely on government benefits, a direct inheritance could impact their eligibility. Through nominating your LPR and setting up a special disability trust in your will, you may be able to provide for their care without jeopardising their entitlements.

"Blended families may also require flexibility with estate planning to provide for stepchildren or ex-spouses, and having your death benefit paid to your estate could offer greater flexibility in this regard."

He says when a super death benefit is paid to a non-dependant beneficiary, it is still subject to tax. "Having the funds flow through your estate does not eliminate this tax liability for non-dependants.

"The Australian Taxation Office views a super death benefit as retaining its character even when paid to an estate. When a super death benefit is paid to a non-dependant, the taxable component of the benefit is subject to a tax rate of 15% plus the Medicare Levy (currently 2%), for a total of 17% and could be even higher."

Perera points out that a will can be contested. "Nominating your LPR as the beneficiary of super death benefit exposes those benefits to potential challenges within the will.  In contrast, a valid binding death benefit nomination directed to a dependant bypasses the estate and cannot be challenged via the will."

He recommends seeking financial advice. For instance, if you are diagnosed with a terminal illness, you may be able to access your entire super balance as a tax-free lump sum.

"Cashing your benefit may not always be the best option, but a good financial plan will consider the tax treatment and your estate-planning wishes in formulating a recommendation.

A lapsing nomination expires after three years and you need to reconfirm it before it lapses. A non-lapsing nomination is permanent unless you revoke it. You can revoke or change your nominations at any time. "If it's a binding nomination, the trustees are bound to follow that through unless there is a legal challenge to it. People don't do a binding nomination because they're unengaged," she says.

Often, people kid themselves that they will attend to it later. "Disengagement has consequences. Many people think their super is automatically dealt with by their estate but that's not the case," says Broome.

How super is taxed

In the event of your death, your benefit will be tax free in the hands of your dependants, such as your spouse and dependent children, including those older than 18 who are still financially dependent on the deceased.

"You can nominate anyone if there is a legitimate relationship or a legitimate tie, but if it's a non-dependant, and they inherit your super, they'll pay tax on that inheritance. If it goes to a spouse or disabled child or child under the age of 25 that can prove dependency, then they don't pay tax," says Broome.

"If your super goes to your adult children, they will be taxed. Take a couple, one dies leaving the other their super, the remaining spouse then dies, leaving the super to their adult children who are in their 40s. They would pay 17 cents in the dollar tax because they are no longer dependants."

When a client dies, Broome says she considers the health of their spouse and if its fragile, weighs up whether super is still the right vehicle for them. "If the surviving spouse is in poor health, it might be worth pulling all the money out of super, even though there's no tax on income there.

"Outside of super they'll be paying minimal tax and adult children won't have to pay the 17 cents in the dollar super tax."

Broome says super fund members generally don't pay enough attention to death benefit nominations or their life cover.

"Most Australians don't actively seek life insurance and are dreadfully underinsured, and it's a vital thing to have."

Remember, default cover is fairly basic, so you need to check whether the sum insured is enough to pay off your mortgage and support your family in the event of death.

If the amount isn't sufficient, you should consider increasing the sum insured.

Similarly, older fund members who have paid off the mortgage, have other assets outside of super and no dependent children, should consider whether their cover is still necessary as the premiums could be considerable.

Finally, consider contacting your fund for help or seeking professional advice as there may be a lot at stake.

It may not seem like it, but Australia is home to a diverse banking landscape. There's the Big Four, of course, but there are also international banks, customer-owned banks, regionally focused banks, digital banks and banks that cater to Australians in specific industries.

There are currently 83 authorised deposit-taking institutions (ADIs) operating in the country, according to the Australian Prudential Regulation Authority. That doesn't include subsidiaries; for instance, Bankwest is a subsidiary of the Commonwealth Bank.

There's no shortage of choice either, depending on what you want from your bank.

For many, choosing a bank will be a matter of cost. Specifically, how competitive the interest rates and fees are on products such as bank accounts, savings accounts and home loans.

What we want from our banks

When global public opinion and data company YouGov asked Australians, in 2021, what the most important factors were when choosing a financial company, having low or no fees was top of the list.

However, there's more to banking than the cost involved. The same survey revealed that people ranked safety and security as being almost as important as fees.

That's hardly surprising when you consider factors such as the adoption of digital banking and the ongoing prevalence of financial scams.

This desire for security is something that banks are well aware of. Michael Lawrence, chief executive of the Customer Owned Banking Association, says that the industry has been working collaboratively on initiatives like the Scam-Safe Accord and others to strengthen protections for customers.

"Australian banks are also currently rolling out the latest scam-fighting technology, Confirmation of Payee (CoP), a new name-matching service designed to protect customers from being tricked into sending money directly to scammers. The service is an added protection for consumers from redirection scams," he says.

Beyond fees and security, YouGov found that good customer service came in as the third highest consideration. What counts as 'good' service is going to differ, of course. After all, Australians interact with their banks in very different ways.

Some want to be able to walk into a branch and seek help in-person. Others will be more comfortable talking over the phone or accessing support through an online chat 
in their banking app.

"Many customers increasingly prefer digital platforms for day-to-day banking like transactions, but the human element remains important for more complex enquiries like mortgages or sensitive issues like financial abuse or scams," says Lawrence.

While there are broad similarities in the way in which banks are approaching issues such as scams, there are also plenty of differences. So how do Australian banks compare on other fundamentals beyond their fees and rates?

For anyone in the market for a new bank, it's likely to be a key question.

To showcase what's out there we have profiled 10 banks across three areas: customer service, innovation and security, and scam protection.

Given the depth of the market, we narrowed our focus to some of the largest retail banks - and one of the largest customer-owned banks - in the country based on the value of household deposits (bank accounts, savings accounts, etc.) they are holding.

But given the way banking is changing, we also included some up-and-coming digital players in the space.

Australia and New Zealand Banking Group

Founded: 1951  
Headquarters: Melbourne    
Classification: Major bank

Customer service 

Widely considered the fourth largest bank in the country, it will come as no surprise to learn that ANZ has an extensive customer service operation.

Customers who prefer to conduct their banking in-person can do so at one of nearly 390 ANZ branch locations across the country.

Those who are happy to talk over the phone can access support seven days a week for everyday banking needs, plus there are specialised support teams for First Nations customers.

People experiencing domestic violence or financial abuse also have a dedicated support team. Meanwhile, there's also 24/7 in-app support available via live chat through the ANZ and ANZ Plus apps.

Innovation

Launched in 2022, ANZ Plus is the bank's foray into digital banking.

Designed to appeal to Australians who prefer app-based banking, the platform offers both bank and savings accounts and has drawn in more than a million customers as of March.

ANZ Plus has many of the features you'd expect of a digital banking platform, including automatic spending categorisation, spending breakdowns and savings roundups, plus it can integrate with services like Cashrewards and Qantas Frequent Flyer.

It's also possible to book an appointment or chat in-app with an ANZ Plus Coach who can help users set up the platform to better understand their spending and saving habits.

Security and scam protection

ANZ customers can add an extra layer of protection when making payments by using tools like Voice ID (an authenticator that uses your voice) and ANZ Shield (a separate authentication app that generates one-time passcodes).

Those using the ANZ Plus app also have access to biometric login features (such as their fingerprint or face), as do those using the ANZ Plus web platform: ANZ recently become the first bank to adopt password-less, web-based banking.

More broadly, ANZ also has fraud detection and prevention technology called Falcon that is designed to analyse and identify suspicious transactions in customer accounts.

Commonwealth Bank of Australia 

Founded: 1911  
Headquarters: Sydney 
Classification: Major bank

Customer service 

Whether it's the number of customers the bank has or the value of household deposits on its books, the Commonwealth Bank is the country's largest bank on a number of metrics.

That includes bank branches. Commonwealth Bank has 659 branches and 1842 ATMs for customers who prefer to do their banking or access support in-person.

It also operates its call centres locally, which customers can ring up to receive support on everything from general enquiries to transaction disputes.

Customers can also chat with a bank representative online in NetBank or the CommBank app or, alternatively, seek answers to simple questions from chatbot CEBA.

Innovation

Commonwealth Bank has been at the forefront of banking innovation in recent years, developing one of the most feature-rich apps on the market.

One of the more novel features built into its app and NetBank is the Benefits finder, which is designed to help customers uncover any payments, rebates or concessions they may be eligible for, such as unclaimed money or energy rebates.

Another innovative step the bank has taken is building up a financial literacy offering through its Brighter hub. Included in that is the bank's Financial Fitness Program, which is available to anyone interested in learning the basics of money management, saving and investing.

Security and scam protection

Commonwealth Bank customers looking to beef up their security while banking online or via the app can use two-factor authentication and biometric logins.

The bank has also put a number of fraud prevention measures in place, such as NameCheck, which alerts customers if the payment details they've entered don't match their intended recipient.

And CallerCheck, which allows customers to verify whether a call they are receiving from Commonwealth Bank is legitimate.

More recently, it announced a new AI measure aimed at disrupting scammers, which involves deploying thousands of AI-powered bots programmed to engage scammers, take up their time and report intelligence back to the bank.

Heritage Bank 

Founded: 1981  
Headquarters: Toowoomba, Qld
Classification: Customer-owned bank

Customer service 

Already one of the largest customer-owned banks in Australia, Heritage Bank is becoming part of an even larger entity as a result of its merger with People's Choice Credit Union and its transition into People First Bank.

Like most players in the customer-owned space, community and customer service are key priorities for Heritage Bank.

To start with, customers can access in-person support and banking services at more than 40 branches in Queensland and NSW. Heritage Bank also operates a 24/7 contact centre in Queensland that customers can call with general enquiries, internet banking queries and scam reports.

There's also a live chat option on the Heritage Bank website, although there's no chat function within its mobile app.

Innovation

While the transition into People First Bank has come with a promise of enhanced digital capabilities and products, only time will tell what will come from the merger for Heritage customers.

The bank has embraced many of the digital innovations that have come up in the banking space in recent years.

Customers can set up a PayID with their mobile number or email and use it to make near-instant payments to other people or to set up a PayTo to make payments to businesses. Heritage bank has also given users the option of paying with their smartphones or smartwatches via Apple, Garmin, Google or Samsung Pay.

Security and scam protection 

Like a growing number of banks, Heritage Bank has a bank-wide approach to combating fraud and scams, including real-time detection and a dedicated fraud detection team tasked with flagging suspicious transactions and contacting affected customers.

Anyone who suspects that they've fallen victim to a scam or fraud can also contact the bank 24/7 for support.

In terms of security, Heritage mobile app users have the ability to set up device authentication, make use of biometric login options (face or fingerprint) and block or cancel their cards if they are lost, stolen or damaged.

Bendigo and Adelaide Bank

Founded: 2007 
Headquarters: Bendigo, Vic    
Classification: Large bank

Customer service 

Perhaps more so than any other bank, Bendigo Bank - officially Bendigo and Adelaide Bank - has a strong reputation for customer service. In fact, it was recently named Australia's Most Trusted Bank for the twelfth consecutive time in a nationwide poll conducted by Roy Morgan.

Practically speaking, customers can access banking services and support across a few mediums. Bendigo Bank has one of the most extensive branch networks, with 423 in operation - many of which are located in regional areas.

However, 10 branches are set to close in the coming months. Customers can also receive support over the phone seven days a week from a local operator (Bendigo's call centres are all based in Australia), although the bank doesn't have an in-app or online chat function.

Innovation

While customer support - particularly in-person support - is clearly a major priority, Bendigo has also been modernising its online platform and banking app, giving users access to features like real-time payments through the New Payments Platform and mobile payments via Apple, Google and Samsung Pay.

As we'll get into later, the real digital innovation powerhouse of the Bendigo family is subsidiary Up bank. Beyond digital innovations, Bendigo has been among the forerunners in sustainable lending. It's one of a small, but growing group of banks offering green loans for customers looking to finance electric and hybrid vehicles or energy-efficient home improvements.

Security and scam protection

Like many banks, Bendigo Bank app users are able to take control of the security of their accounts by enabling biometric logins (with a fingerprint or face scan), setting up transaction limits and locking their cards in-app if they are lost or stolen.

Multi-factor authentication can also be enabled (and is mandatory in some cases) when doing tasks like authenticating payments through web-based banking. Bendigo also has a dedicated fraud team tasked with monitoring customer accounts in real time, and should suspicious activity be detected, reaching out directly to customers.

Macquarie Bank

Founded: 1985 
Headquarters: Sydney   
Classification: Large bank

Customer service 

Macquarie Bank is widely regarded as the largest bank in Australia behind the Big Four. Although, there's a key difference between Macquarie and ANZ, CBA, NAB and Westpac: it's a digital-first bank.

That means that Macquarie is focused on its banking app and online banking platform which, unsurprisingly, is where it directs customers in need of assistance 
by encouraging them to make use of the online chat service (which is available on weekdays during business hours).

Those looking for additional support can also contact Macquarie via phone, but the bank no longer offers traditional in-person branch support or banking services such as cash and cheque deposits.

Innovation

One of the standout features of Macquarie's app and banking platform is the in-depth insights it can provide customers on their spending habits and financial position. That includes overviews of net wealth and cashflow, plus spending breakdowns based on broader categories and individual merchants.

There's even an in-built budgeting tool for those looking to gain more control over their finances.

Macquarie has also indicated that it's looking to use AI to deliver more insights and services in the future; for instance, giving customers the ability to fully automate the process of paying their bills.

Security and scam protection 

As you would expect from a digital-first bank, Macquarie's app and online banking platform are equipped with common online security and anti-scam measures, but the bank has taken things to another level with a few extra tools.

The first of these is the Macquarie Authenticator. A separate, multi-factor authentication app designed to allow users to accept or decline any transactions or account changes that may crop up.

The second is the Macquarie Password Monitor, which, as the name suggests, keeps an eye out online for any potential breach of a user's Macquarie ID or password and, if it detects a compromise, locks access to online banking.

ING Australia

Founded: 1999  
Headquarters: Sydney   
Classification: Large bank

Customer service 

A subsidiary of global financial giant ING Group, ING Australia has made considerable inroads into the local banking sector over the past two decades - especially with Australians who are happy to conduct their banking online.

That's because ING doesn't have any branches for customers wanting to deposit money or speak to someone face to face. Instead, ING offers phone support from its contact centre in Wyong, NSW, which is available on weekdays (8am-8pm) and weekends (9am-5pm) for general enquiries.

Customers can also get in touch with the bank via secure messaging through the ING app or internet banking portal.

Innovation

ING was one of the first banks to launch an automatic savings roundup tool that automatically sweeps money into a savings account every time a transaction is made with a card.

For example, if roundup is set to the nearest $1 and a purchase is made for $4.50 that transaction will be rounded up to $5 and 50 cents will be transferred into savings.

Since its initial release, ING has given users the option of funnelling roundups towards their home loans and more recently it launched an option whereby customers can nominate a charity that they want their roundups directed towards.

Security and scam protection 

ING app users have a few options when it comes to securing their cards and accounts.

For instance, if they suspect that their card details have been comprised or the card itself is lost or stolen, a temporary hold can be placed on the card in the app.

Customers can also choose between setting up a code, a fingerprint scan or a face scan to access the app. And if someone suspects that they've fallen victim to a scam or fraud, ING has a dedicated 24/7 scam hotline to contact.

National Australia Bank 

Founded: 1981    
Headquarters: Melbourne
Classification: Major bank

Customer service

As the country's third largest bank, it's natural that NAB delivers banking services and support in person, over the phone and online. It currently has 436 branches in operation for customers looking to do their banking in person, 210 of which are located in regional and rural areas.

In fact, NAB has pledged to keep all of its rural and regional branches open until July 2027, at the very least. NAB users can also conduct phone banking and seek over-the-phone support by calling through to one of its locally based call centres, or chat with a representative online via its app or internet banking platform.

Innovation

Related to customer service, one of NAB's more interesting innovations in recent years has been the roll out of its 'Customer Brain'.

Launched in 2023, Customer Brain is an AI-powered engine that draws on thousands of data points to facilitate simple, personalised interactions with customers in order to drive engagement and retention, and create better experiences.

For example, the Brain can nudge a customer whose term deposit is about to expire so that they roll it over or move funds elsewhere, or it can send a congratulatory message to a mortgage customer who has just paid off 50% of their loan.

Security and scam protection 

The NAB app supports biometric authentication via Face ID or fingerprint, plus both app and internet banking users have the option of registering for NAB's SMS Security feature, which can add another layer of protection when making transfers, updating personal details or adding new payees.

Speaking of which, NAB has recently launched a Confirmation of Payee feature aimed at helping prevent scams and fraud. It works by allowing customers to verify the name associated with a new payee's account before making a payment, ensuring that it matches.

Up

Founded: 2018    
Headquarters: Melbourne
Classification: Digital bank

Customer service 

In the seven years since its launch, Up has cemented itself as one of the leading digital banks in Australia, surpassing the one million customer mark in late 2024.

As an app-only bank, the range of support available to its customers isn't anything like that offered by more traditional banks.

Unlike the extensive network operated by its sister bank Bendigo, Up doesn't have any branches. Instead, the main way for Up customers to ask questions and get support is through the live chat function in the Up app (open 6am to 12am), though some over-the-phone support 
is also available.

Innovation 

One of Up's major appeals is its regular rollout of new app features. In fact, Up has a public roadmap (the Tree of Up) showcasing its products and tools in development.

There's no shortage of innovations to highlight, but one of the more interesting is Up's take on joint accounts called 2Up.

Unlike a more traditional approach to joint finances where everything is merged, Up allows users to maintain their existing personal accounts - which remain private - while also creating new joint transaction accounts (for shared expenses) or joint savings accounts (for savings goals).

Up is also able to clearly track and showcase who spends what.

Security and scam protection 

Among the various forms of protection on offer, Up has a few features designed to increase customer awareness and decrease the likelihood of falling victim to scams or fraud. For instance, Up applies dynamic payment limits each time a new payment is created.

These are based on previous transaction amounts and volumes, which means a large payment to a new payee will be treated differently to a smaller payment to a regular payee.

Customers will also receive real-time push notifications on their phones for all transactions (which include the price, vendor and available balance) to help users quickly spot suspicious activity.

U Bank 

Founded: 2008 
Headquarters: Sydney
Classification: Digital bank

Customer service

Ubank is a subsidiary of NAB and a self-described digital bank that provides accounts and services through its banking app and online banking platform. Given that, it won't come as a surprise to learn that Ubank is branchless.

While it has a self-service option called Ubank Chat in its app, Ubank doesn't offer person-to-person support through its app or online platform. Instead, customers looking for human support will need to contact Ubank over the phone.

Based in Sydney, the Ubank call centre is open between 8am and 7:30pm on weekdays and 8am and 5:30pm on weekends.

Innovation

Ubank has developed a stream of handy financial-management tools for its app users, including its Pay Cycle feature that can display income and expenses based on someone's pay cycle and its Bill Planner feature that can help track upcoming bills.

One particularly useful - although relatively rare - feature provided by Ubank is Connected Accounts.

In short, it allows users to link their accounts from more than 140 banks, super funds and investment platforms and have them displayed within the Ubank app to paint a better overall picture of their financial position.

Security and scam protection

Ubank provides its users with various options to safeguard their accounts including passkeys, which were introduced for app users last year.

In essence, passkeys can provide greater protection against phishing and scams compared with passwords because they are stored on the device and, by design, necessitate multi-factor authentication because they require users to enter a PIN, fingerprint or face scan as well.

Interestingly, the bank has made a pledge (which it calls the Ubank defence) to reimburse 100% of a customer's money if it is fraudulently taken from their account. However, customers can't have contributed to the loss, and they will need to have reported it to Ubank promptly.

Westpac 

Founded: 1982    
Headquarters: Sydney  
Classification: Major bank

Customer service 

Generally considered to be Australia's second-largest bank, Westpac is not lacking when it comes to support and access to banking services.

Westpac has a 24/7 online chat function in its app and online banking platform that customers can use to talk to Westpac representatives.

The bank also offers phone support for customers with general and product enquiries, plus it has a dedicated scam and fraud team and a remote Indigenous call centre that offers translation services in some languages.

Customers looking for assistance or to use services in person can make use of the 611 Westpac branches operating around the country.

Innovation

Westpac has put a lot of focus into building up its app with innovative features designed to help customers manage their money.

For example, the Tax organiser tool, which allows people to organise their tax-related transactions and find more deductions.

App users can select relevant expense areas (for example, investment-related expenses or charitable donations) and then the tool will analyse and collate any relevant transactions for users to review.

Another is the Savings Finder, which can automatically pull together a list of subscriptions and bills for users to look over and - potentially - identify services that can be cut back.

Security and scam protection 

As scams have become more prevalent in recent years, Westpac has brought in a number of features aimed at protecting customer payments.

For example, when someone goes to make a payment to an account deemed suspicious, Westpac SaferPay will raise a red flag and require them to run through a number of questions before they are able to proceed.

In a similar vein, Westpac Verify will alert customers if the account name of a new payee doesn't match up with the account details provided.

Finally, customers have the option of setting up Westpac Protect, which prevents certain transactions going through without the input of a one-off security code.

Touted as being a productivity and technological gamechanger, it has the capacity to influence, even reshape, virtually every aspect of our lives, including our relationship with money.

I asked AI assistant Google Gemini 'What are the pros and cons of using yourself or another AI platform to manage money?'.

The benefits of using AI to manage your money

It promptly returned the following pros:
• automation and efficiency
• speed and data processing
• personalization (to a degree) - (note the US spelling)
• objectivity and reduced bias
• predictive analytics
• cost-effectiveness
• accessibility
• compliance

The downsides of using AI to manage your money

Interestingly, it outlined a larger number of risks (nine risks versus eight benefits):
• lack of human understanding and emotional intelligence
• limited contextual understanding
• 'black box' problem and lack of transparency
• reliance on data quality
• security and privacy risks
• over-reliance and lack of human oversight
• inability to handle complex or unique situations
• regulatory and ethical concerns
• technological limitations and obsolescence

Let's explore these points in more detail, as well as examine other risks that AI itself may not even recognise as being present.

Data accuracy

AI is like a vacuum cleaner - it hoovers up information from all over the internet and then sifts through the material collected.

However, the technology is only as reliable as the data available to it.

There is no shortage of unreliable information online today, including:
• opinions presented as facts
• political propaganda
• marketing spin
• deliberate misinformation and disinformation
• scams, fraud and deepfakes
• outdated information

Using AI does not remove the need to distil fact from fiction.

Indeed, it becomes even more difficult based on the next point.

Lack of transparency

Regardless of which platform you use, AI typically doesn't demonstrate how it arrives at its decisions or recommendations - the sources relied upon and how it weighed them up to steer one way over another.

This lack of transparency limits our ability to fact-check outputs, identify gaps in the decision-making process, and trust the accuracy and completeness of its recommendations.

Product placement

While product placement is nothing new, there is growing debate about how it relates to AI.

Meta founder Mark Zuckerberg recently suggested that advertising will soon use AI to become fully autonomous.

In a financial context, this presents the potential for products and services to be placed (even paid for) yet appear as organically generated recommendations, and potentially flout Australian laws designed to stop vested interests pushing particular financial products.

Input bias 

Every AI platform has evolved within certain parameters. These intrinsic biases continue to shape how it operates and learns over time.

The Americanisation of the technology (as previously highlighted in Gemini's default spelling) is one obvious example.

Gender is another, given virtually all the founders (at least of the highest profile AI technologies) are male.

Race, age, sexuality, socioeconomic status, education, profession, health, disability are all potential biases, and more.

AI tools themselves cannot recognise how these biases skew their collation, analysis and presentation of information.

Ethical concerns

Beyond formative bias, there are other ethical risks associated with AI usage.

The most obvious is - are you doing someone out of a job by relying on a machine? Then there are its environmental impacts.

Are you really a sustainable investor if you use AI, given the enormous amounts of energy required to power its servers?

Additionally, there are concerns about AI becoming nefarious.

Think The Terminator movies where machines become self-aware and turn on humanity, and authoritarian countries using AI to wage cyberwarfare.

Untailored recommendations

Regular AI users will be familiar with its (over)generalisations.

The more complex or nuanced an issue, the less capable it is of providing tailored, meaningful suggestions.

Part of this stems from a lack of contextual awareness.

No amount of typing or dictating can provide it with a full understanding of your personal context. Its outputs also depend on what exactly you ask of it.

The fewer specifics you request of it and constraints you put on its search parameters, the less detail it will return.

Privacy concerns

Providing detail and specifics to help AI tailor its recommendations creates a new risk for yourself - privacy.

You also provide identity data simply by using AI, such as your IP address and search history.

Your data, both individualised and collated, can subsequently be accessed by others - both legitimate companies and regulatory bodies, as well as scammers, foreign governments and organised crime.

Unemotional context

Perhaps the greatest limitation of AI is its lack of humanity.

Specifically, the lack of emotional intelligence.

It cannot understand how emotions factor into our financial decisions and desires: from the influences of past trauma to current circumstances, hopes for the future, gut instincts or personal preferences.

Economists struggle with this, relying on data to make predictions which overlooks, for example, how fear drives stockmarkets - herd mentality, panic selling, fear of missing out (FOMO). Computers, by their very nature, are even more susceptible to this.

Cost vs value 

Ultimately, like everything money related, you get what you pay for. Free, basic versions of AI give you basic functionality.

Paid-for versions will deliver enhanced features and, likely, superior search options.

Yet they still have substantial limitations.

In Gemini's own words: "AI is a powerful tool to assist with money management, but it should not fully replace human oversight and expertise, especially for complex financial planning."

By the early 1980s, she was smoking Winfield Blues, just $1.07 for a pack of 25. Today, that same pack costs $55.80. On a disability care worker's wage, it's out of reach. So, for the past three years, Linda, now 63, has been buying her cigarettes under the counter.

"They're $50 for 100 tailors," she says. "It used to be $60, but with more places competing, they had to drop the price."

The rise of black market tobacco

Linda is part of a growing shift of everyday smokers turning to the black market. It's a multi-billion-dollar trade run by organised crime, fuelling turf wars, fire-bombings and undermining Australia's once-celebrated tobacco strategy.

Illicit tobacco is manufactured overseas for a fraction of the cost, then smuggled into Australia by crime syndicates, mostly based in Asia and the Middle East. Containers are mislabelled, hidden in cargo and quietly slipped through ports.

Some get seized and destroyed. In 2023-24, Australian Border Force (ABF) made more than 51,600 detections, intercepting more than 1.8 billion cigarettes and 436 tonnes of looseleaf tobacco. Yet the trade continues to thrive because the profits dwarf the risks.

Back in 2017, the Australian government's Black Economy Taskforce found smuggling $150,000 worth of cocaine or heroin that might fetch $2.3 million on the street often lead to prison time. Spend the same amount on illicit tobacco, and you could earn up to $10 million but would only be slapped with a modest fine under sentencing laws at the time.

A 2024 study by Charles Sturt University researcher Rob Preece showed how the numbers stack up: a single shipping container can carry 9.5 million cigarettes (around 475,000 packs), costing just over $562,000 to import. Sold at $19 a pack, the profit can reach close to $8.5 million, a 1500% return on investment.

"At this level of potential profitability, a criminal would only need one container in 16 importations to be successfully smuggled across Australia's border to make a profit," the paper stated.

Payments and penalties

While the ABF says penalties can include up to 10 years' imprisonment and fines five times the amount of duty evaded, enforcement on the ground tells a different story.  Between July 2018 and January 2025, the Australian Taxation Office recorded only 30 convictions for illicit tobacco offences, with jail sentences topping out at three years.

Once inside the country, the cigarettes are distributed through a network of wholesalers, often linked to organised crime, before ending up under the counters of tobacconists and convenience stores.

"Of course, they're not on display but hidden in the back room," says Linda.

"There are many different types, and even vapes in many different flavours."

Many stores use privately owned ATMs to avoid paper trails. An ABC investigation linked these ATMs to Next Payments, a company Macquarie Bank increased its stake in to 47% earlier this year. But where there's money, there's muscle.

As rival syndicates compete for control of this lucrative market, violence is on the rise. Fire-bombings, arson attacks and targeted burglaries have become a regular feature of what police and media now call the tobacco wars.

In Victoria alone, more than 100 businesses linked to the black-market trade have been set alight since 2022. Some attacks are suspected retaliation between organised crime groups. Others are seen as warnings to shop owners caught selling for the wrong side.

The pattern is spreading. Arson attacks in NSW, Queensland, South Australia, and Western Australia have surged, with shop fronts targeted by gangs enforcing turf through fear.

Linda, who lives on the outskirts of Perth, has seen it first-hand.

"One of the shops near me got broken into twice," she says. "There are some awful people out there."

What worries her most isn't the crime but losing her only affordable supply.

"It really annoys me. We're just getting a good deal, and this kind of stupid stuff might shut them down," she says. "I'm not saying it's right, but it's what people can afford."

When good policy turns bad

Australia has led the world in driving down smoking rates through plain packaging, public campaigns and, above all, price.

Since 2000, tobacco excise has soared.

A cigarette that once carried 19 cents in tax now includes $1.40. Tax alone makes up nearly two-thirds of the price of a smoke.

In April 2010, the Federal government introduced a 25% hike to the tobacco excise. From December 2013, it began a series of 12.5% increases repeated annually until 2020, a blunt force policy that was popular and increased government revenue.

It worked... for a while. In 2019, almost 60% of smokers said the cost pushed them to quit or cut back. The World Health Organisation still calls taxation the "single most effective and cost-effective measure" to reduce smoking.

But the model is starting to show strain.

Tobacco remains the country's leading cause of preventable death, killing 24,000 people a year. And while many smokers want to quit, addiction is a stubborn enemy.

"I've tried five times with no success," says Linda. "You can't expect people to quit just like that."

Economists call it the Laffer Curve: raise taxes too far and people start avoiding them altogether. In Australia, that avoidance now looks like shipments of contraband, fire-bombed retailers, and tax revenue in freefall.

It's a textbook case of the cobra effect. Under British colonial rule in India, the government offered bounties for every dead cobra to reduce their numbers. At first, it worked. Then people started breeding cobras for profit.

When the scheme was cancelled, breeders released the now worthless snakes into the streets. In Australia, years of aggressive excise hikes have helped drive down smoking, but they've also spawned a thriving shadow economy. In trying to kill smoking, we may have bred something worse.

A fork in the road 

With illegal tobacco sales surging and shop fronts being fire-bombed, policymakers now face a difficult choice. NSW Premier Chris Minns has called time on the current approach.

"I'm not arguing with the public health benefits of putting an excise on tobacco," Minns said. "But the massive increases have exploded the illicit tobacco marketplace."

His comments followed Federal budget forecasts showing tobacco tax revenue is expected to fall from $9.7 billion to $6.7 billion over the next five years, despite continued annual increases.

"The biggest supporters of a massive excise on tobacco sales in NSW are probably organised criminals," Minns said. "It's a giant black market, on display in every suburb."

Retailers say that they are the ones caught in the crossfire.

"It's bloody terrifying," says Theo Foukkare, chief executive of the Australian Association of Convenience Stores. "They're at the mercy of criminal gangs who threaten to - and often do - fire-bomb their stores if they won't sell dodgy, illegal vapes and tobacco."

But Federal treasurer Jim Chalmers isn't budging. "I respectfully disagree with Chris," Chalmers said.

"I don't think the answer here is to make cigarettes cheaper. I think the answer is to get better at compliance. I'm not proposing to cut taxes on cigarettes."

From July 1, tougher licensing schemes and harsher penalties came into force across Australia. Both NSW and Victoria have ratcheted up fines into the hundreds of thousands of dollars, with the former also enforcing jail terms of up to 15 years for selling illicit tobacco.

South Australia has the biggest fines: anyone in possession of a 'large commercial' quantity will face a fine of up to $2.1 million for a first offence and up to $4.2 million for a second or subsequent offence.

Federally, the product itself is changing. Cigarettes sold in Australia will lose their flavours, branded descriptors and boutique filters. Every smoke will be the same shape and size, and new warnings will hammer home the health risks.

But for smokers like Linda, none of that changes the basic equation. She knows the risks. She's aware of the crime. But for her, it's not about morality or choice. It's about cost.

"I want to quit smoking. I've tried the patches, gum, even hypnosis. I don't want to support gangsters," she says. "But smoking is a necessity for me. It's a foreign thing for me not to do."

She doesn't excuse the black market but sees it as a system created by policy failure. "They've overtaxed us and got greedy, and now they're paying for it."

"If the government spent even a fraction of the billions they make from us on actually helping people like me quit, instead of just chasing illegal smokes, maybe the numbers would drop anyway."

The war on vapes

Fewer than 10% of Australians now smoke daily, but vaping is surging, with vape use tripling between 2019 and 2022-23, according to the Australian Institute of Health and Welfare. Produced in candy flavours and sleek formats, vapes have become a gateway habit for many young people.

In response, the Federal government has banned disposable vapes, and limited nicotine vapes to pharmacy-only distribution via prescription. By restricting imports, the rules have strengthened enforcement against illegal vapes. Yet just as with tobacco, a black market persists.

From July 1, 2025, only TGA-compliant nicotine vapes can be sold in Australia. New rules restrict flavours and ingredients, limit nicotine strength, and mandate pharmaceutical-style packaging. The reforms aim to tighten quality control and curb the appeal of vaping.

Renters are squeezed by rising rents, and first-home buyers are locked out by soaring prices, although some relief is in sight, thanks to the Labor government's 2025 policies.

Yet behind closed doors there is a hidden resource... throughout Australia more than 13 million spare bedrooms sit empty. Rooms sitting empty, in a country desperate for housing.

It's a contradiction that cuts to the core of the problem, and a potential part of the solution.

If even a fraction of homeowners were willing to rent out their spare rooms, it has the potential to create a significant pool of affordable housing.

But for many homeowners, the idea remains unthinkable.

The hesitation isn't just an emotional response. Homeowners worry about the impact on their lifestyle, losing their pension or copping a tax bill.

Some feel it's a loss of privacy, others fear it's a financial trap.

Are these concerns justified? And in a housing system under pressure, do the perceived downsides outweigh the very real benefits for renters and homeowners alike?

With the right incentives, clearer tax rules and a shift in mindset, thousands of these rooms could be brought back to life, providing shelter, generating income and even helping buyers get into the market.

The housing crisis: too big to wait

The 2025 Federal election was less a contest of ideology than a referendum on housing. Voters gave Labor a second term with a simple, urgent message: fix housing and fix it fast.

In response, the government rolled out a mix of supply and demand-side measures.

On the supply front: a promise of 1.2 million new homes over five years, $54 million for modular and prefab builds and fresh incentives for apprentices and their employers.

For buyers, the Help to Buy scheme got an $800 million boost, and the First Home Guarantee was extended to allow 5% deposits with no lenders mortgage insurance.

It's ambitious. But even the best policies take time. According to the Australian Bureau of Statistics (ABS), it takes an average of 12.7 months to build a freestanding house. Apartments take closer to three years. And while prefab has promise, it's not yet ready at scale.

Meanwhile demand keeps surging.

The government's own State of the Housing System report predicts supply won't outpace demand until at least 2029. "Relief from the housing crisis is not in sight," says Lyndall Bryant, a property economics researcher at QUT and chair of the Housing Security Research Group.

Her briefing paper, 'The role of older Australians in addressing the housing crisis: spare bedrooms, taxation and the pension', discusses potential solutions to Australia's excess spare room problem.

"If new housing stock is years away, then shifting the focus to existing housing may provide some short-term solutions."

And there's no shortage of homes with space to spare. ABS data shows that around 7.4 million households have one or more bedrooms than they need. An immediate source of housing that's already built and available. TABLE

How did we get here?

It's the legacy of the Australian Dream: the spacious family home on a big block, close to schools, with space for each child and a backyard for the dog.

But the dream was designed for family growth, not for what comes after. When the kids move out, the house doesn't shrink. It becomes an empty nest - an inefficiency in the middle of a housing emergency.

And because the rate of homeownership increases with age, the mismatch grows over time. More than 80% of Australians older than 65 own their home, and three-quarters of those homes have three or more bedrooms, with 84% of them under-utilised.

In most cases, of course, the older we get, the emptier our houses become.

For homeowners in this position, there are usually three options: downsize to something smaller, rent out a spare room, or stay put and make peace with the space. So far, most choose the latter.

A 2024 report by Temple & Webster, Finding the Right Fit, found that Australians with two spare bedrooms were the most satisfied with their living arrangements. Some 77% of those with extra rooms said their home was the "right size" and had no plans to move.

These extra rooms are not sitting idle though. Australian Housing and Urban Research Institute (AHURI) research discovered that spare bedrooms have found new lives as home offices, sewing rooms, storage spaces or gyms. Others are kept ready for visiting adult children, grandchildren or friends.

For many older Australians, these spare spaces are more than practical, there's also an emotional component. A guest room offers the possibility of hosting loved ones. An extra bedroom makes ageing in place safer, allowing space for overnight carers or future needs, which is why decades of government attempts to encourage downsizing have largely failed.

As Bryant puts it: "Various policies to incentivise older people to downsize and release these large homes for younger families are rejected due to a preference to age in place and, hence, the inefficiency persists." See number 1, below, to understand the implications of staying put.

The best way to rent out a room 

If downsizing isn't practical and staying put is stretching the budget, another option emerges: renting out a spare room.

It's a move that could benefit everyone, easing rental pressure, creating low-cost housing options, and helping homeowners unlock extra income.

"An opportunity exists to incentivise older Australians to rent out a spare bedroom," says Bryant. "It could improve access to affordable housing and offer cost-of-living relief to vulnerable older Australians."

But the idea often hits a wall. They've heard the stories that it will affect their pension, or that they'll get hit with capital gains tax (CGT) when they sell - that it's just not worth the hassle.

According to Bryant, however, many of the fears around renting out a spare room are "somewhat of an urban myth". The downsides are often overstated or misunderstood. So, what's really going on?

To rent out a room you need to understand CGT

• CGT is not a separate tax. It's simply the tax you pay on the profit or 'capital gain', when you sell an asset for more than you bought it.
• If you sell shares, artwork or property and make a gain, that amount gets added to your regular income and taxed at your marginal rate. 

There are important caveats.

• If you've owned the property for more than 12 months, you'll only be taxed half the gain. 
• And if the property is your principal place of residence (your main home), it's usually exempt from CGT entirely. That's known as the principal place of residence (PPR) exemption. 

CGT: The practical reality 

Here's the part that trips people up: if you rent out part of your home - say, the spare room down the hall - the full PPR exemption could disappear.

Importantly, you're not taxed on the whole property but just the part that was rented.

The Australian Taxation Office (ATO) looks at three things: how much of the property was used to generate income (including shared spaces such as kitchens and bathrooms), how long it was rented, and whether it was a commercial or domestic arrangement.

That last distinction matters. If you rent out a room and provide meals and shared living, without a lease, it's often considered a domestic arrangement, not a commercial one. So there may be no CGT impact at all. But if the room is advertised and leased, and the tenant pays for their own groceries and utilities, that's counted as generating income - with that comes a tax bill. So how much are we really talking? See number 3.

How renting out a room affects your pension

For many older Australians, this is their biggest fear - that earning income, even a small amount, will reduce or cancel their age pension.

There's a reason for this. As Services Australia states, most types of income count in your income test, including rental income, both commercially and with boarders or lodgers. But again, the rules are more nuanced than they appear.

According to a guide from the Department of Social Services, updated in May 2025, income generated from domestic arrangements is assessed at reduced rates for the age pension (and other pensions). See table below.

Even better, if the boarder is a close family member, the rent may not be counted as income at all. And if there's a mortgage on the home, interest payments can be partially offset by assessable rent.

An example from Allianz Retire+ highlights how this works.

Sally, 60, owns her home but still has a $60,000 mortgage at 6% interest per year. After being made redundant, she begins receiving JobSeeker while looking for work. When her friend, Melissa, needs a place to stay, Sally offers one of her two spare rooms for $300 per week - a total of $15,600 per year. Under Centrelink's income test, 70% of that rent is assessed ($10,920). But because Sally is still paying $3600 per year in mortgage interest, her assessable income from rent is reduced to just $7320.

Future improvements

There's also Work Bonus, a scheme that encourages pensioners to continue working throughout retirement. Bryant says eligible pensioners can earn up to $504 a fortnight ($13,104 a year) without it affecting their pension.

However, the ATO determines 'work' as requiring 'effort', meaning passive income (such as renting out a room) can't be included.

Bryant, however, believes pensioners should also be able to earn $504 a fortnight from passive income without it affecting their pension. "It ought to be easy enough to apply the scheme to rent as well as income from work, as it arguably already does, given that renting out spare bedrooms is a form of self-employment and hence 'work'," she wrote in an article published in The Conversation.

Bryant noted in her policy briefing that no change to the Work Bonus policy would be required for this approach to be implemented.

"A broader understanding of this policy by homeowners receiving the pension would free up much-needed affordable accommodation, while assisting pensioners with cost-of-living pressures."

Not a pensioner?

Capital gains tax isn't just a homeownership issue, it's also a borrowing one. That's due to a significant policy change from Commonwealth Bank, which updated its lending criteria recently to allow up to 
$150 of boarder income per week to count towards a loan application.

Through Commonwealth Bank, home buyers can now borrow more by showing that someone will contribute rent, even before the arrangement has begun.

The change could increase borrowing power by up to $50,000, opening the door for home buyers who may otherwise have fallen short on income.

For first-home buyers, especially those relying on government schemes or family guarantors, it's potentially transformative.

"Think about this," says George Samios, mortgage broker and founder of Madd Loans. "In some cases, you can now pay zero stamp duty, access the first-home buyer grant, and count up to $650 a month towards your mortgage. That could make or break a deal."

It also applies to refinancing. A single parent could now include the $150 a week in board paid by an adult child, increasing their borrowing power for a cheaper interest rate.

Homeowner Ben Donnelly says this kind of policy reflects how people live. "I rented out three rooms to a few mates to help cover the mortgage," he says, thinking back to his first home in 2015. "Forget that the house had no blinds or air con. We were just stoked to have a place. It made a huge difference, but none of that boarder income could actually be used to help with my borrowing capacity."

Fast forward to today and homeowners have that possibility through a major bank. And while Commonwealth Bank's announcement is making headlines, other lenders have been quietly accepting boarder income for years, although with different standards. Newcastle Permanent, for example, will accept 100% of boarder income, if it doesn't come from an immediate family member.

But while the policy shift might help people buy a home sooner, CPA-registered tax agent and mortgage broker Matt Tully says the change could come with long-term costs.

As discussed earlier, the ATO draws a line between domestic arrangements (such as board and lodging, where meals and shared facilities are included) and commercial ones (where a room is rented more formally). Only the latter triggers CGT.

Tully argues that under these lending policies, the arrangement could be considered commercial. And as he explains, "That means you've just given up your full CGT exemption on your owner-occupied home."

Tully stresses that it's not the Commonwealth Bank policy itself that's the issue. "This happens whether you're borrowing or not. But what banks and brokers don't always explain is that CGT is now in play because income is in play."

While it's not the tax equivalent of the life sentence you might have been led to believe it is - the examples before show that there are plenty of ways to reduce your CGT liability - it's worth being aware of the tax consequences of your choices.

The big picture of your decision

"The hardest thing in the world is to understand income tax," Albert Einstein once lamented to his accountant. If even he struggled, what hope do the rest of us have?

Australia's CGT is no exception. The ATO's 666-word guide to CGT exemptions proves that when it comes to tax, the Devil really is in the detail. But here's the thing: understanding what gets taxed and when can empower homeowners and buyers to make more informed choices.

Thankfully, financial advisers are paid to wade through the weedy anachronisms of tax law, so you don't have to. Beyond the financial complexity lies something deeper: the emotional weight of sharing 
a home that holds a lifetime of memories. Myriad considerations arise.

As Bryant highlighted in The Conversation, Australians renting rooms need legislated protections from elder abuse and spurious claims of cohabitation and other rights.

"Tenant matching and management systems could make the process simpler." Housing markets don't operate in a vacuum. They are driven by choices, whether deliberate or passive. Whether it's downsizing, renting out a spare room or holding tight, every decision - or lack thereof - shapes how we live.

But in a country facing a housing crisis, the question isn't just whether empty nesters should reconsider their options. It's about what will motivate them to fill their empty rooms and, in doing so, help reshape the future of housing.

1. Cost of an empty nest

Staying put comes with trade-offs. This is where Australia's housing crisis collides with the cost-of-living crisis, according to QUT's Lyndall Bryant. She says many older homeowners are "asset rich but income poor". They have valuable homes but not enough income to live comfortably.

With 80% of older Australians relying on the age pension and a quarter living in poverty, according to the Australian Human Rights Commission, it's easy to see how homeownership can mask hardship.

A 2021 UTS study found high rates of energy poverty, food insecurity and social isolation among older Australians. Where they lived played a big part in the results.

More than one in four Australians 60 years and older experiences some degree of loneliness, according to a recent analysis published by The Medical Journal of Australia. It goes on to say that loneliness and social isolation are linked to heart disease, stroke, diabetes, dementia and depression.

We're dealing with two truths: Australians want to stay in their homes and many of them, especially older ones, are quietly suffering - physically and financially - because of the choice they make.

2. Downsize your house, upsize your super 

If you're older than 55 and own your family home, there's a generous incentive to boost your retirement income, even if you're no longer working. The downsizer contribution allows eligible homeowners to contribute up to $300,000 per person from the sale of their home directly into super. That's up to $600,000 per couple, provided both are older than 55 years.

"A key advantage is that downsizer contributions don't count towards your annual non-concessional contribution cap, which is currently $120,000 for most people," said Sophie McRae, a financial adviser from TelstraSuper, on the Friends With Money podcast. "But there are eligibility rules around ownership, and timing you need to meet."

It's a compelling offer, but one few take up.

According to Australian Seniors' research, almost 70% of empty nesters have no intention of downsizing, a move that would free up larger homes for larger families.

Just 19% moved to a smaller home after their children moved out, while 13% say they're considering it.

3. Formally rent out a room 

Take this example provided by tax accountant and mortgage broker Matt Tully. You buy a two-bedroom unit for $500,000. Five years later, you sell it for $700,000, so you've made a $200,000 capital gain.

While you owned it, you rented out one of the bedrooms on commercial terms, and the tenant also used shared areas. In this case, half the floor space was effectively rented, so half the gain ($100,000) is subject to CGT.

Because you owned the property for more than 12 months, only half of that ($50,000) is taxable.

If your overall income for the year is high, say more than $190,000, you'll pay tax at the top marginal rate of 47% (the highest rate of 45% plus the Medicare Levy). That's $23,500. At lower incomes, it could be significantly less.

Yes, it's a cost, and a big one, especially if you're unprepared for the hit. But over those five years, you could have earned $300 a week, or $15,600 a year, in rental income. That's $78,000 in total. Much of it is also tax-deductible, if you claimed home-related expenses such as utilities, maintenance and council rates.

There are also situations where homeowners won't need to pay CGT on a spare room, even if they've rented it out.

If you bought your home before September 20, 1985, congratulations, you own what the tax office calls a 'pre-CGT asset'. No tax is payable even if you've been renting the spare room for decades. In many cases, the homeowner still comes out ahead.

4. Accommodating a boarder 

QUT's Bryant outlined another example in her brief: "A pensioner has owned their family home since 1999 and rents two spare bedrooms providing board and lodging for local apprentices for the past 10 years, earning $300 a week," the brief said.

"As a domestic arrangement, the $15,600 income earned per annum is not taxable and no CGT liability exists."

In these cases, the rent can't be claimed as income and expenses can't be deducted, but the upside is tax simplicity.

Some might say that's a fair trade.

As an employee's income rises in line with inflation, they can end up paying more tax as a result of 'creeping' into a higher tax bracket.

For instance, someone earning $45,000 a year pays 16 cents tax for each $1 over $18,200, or a total of $4288 (not including Medicare).

If they received a 3% pay rise to keep up with inflation, perhaps mandated in an industrial award, they would receive an extra $1350 before tax. And that extra income would push them into a higher tax bracket, so they would pay 30% tax on that extra money - almost twice as much.

The issue for policymakers and economists is that the person isn't earning more once inflation is taken into account, but they are paying more tax, so they end up worse off.

Over the 12 months to December 2024, private sector wages grew an average of 3.3% and public sector wages rose 2.8%, according to the Australian Bureau of Statistics. These pay rises are even more modest once inflation is taken into account. Over the same 12 months, the consumer price index (CPI) rose 2.4%.

And while circumstances vary from individual to individual, workers are often a little worse off in real terms, that is, after adjusting for inflation.

A little extra tax on a small amount of income might not seem significant, but if this happens several years in a row, it can erode a taxpayer's real income and standard of living.

How paying more tax adds up

There's also a second way that bracket creep affects a worker's take-home pay. Even if they don't jump from one tax bracket to another, they end up paying a larger portion of their money in tax.

For instance, if someone is earning $60,000, their top tax rate is 30% in 2024-25. Their total tax bill is $8788, which is equivalent to 14.6% of their income.

If they received a 3% pay rise to compensate for inflation, their pay would rise to $61,800 and they would remain in the same tax bracket. They would pay $9328 in tax, equating to 15.1% of their income.

This, too, might look like a small amount, but it can add up to something more significant.

Ben Phillips, associate professor at the Australian National University's Centre for Social Research and Methods, notes that bracket creep is more punitive for people on lower incomes.

"If you were on, say, $18,200, you're currently paying no tax. But as your income increases - just because wages increase slowly over time - you would start to pay tax. You'd go from paying no tax to, five years down the track, a couple of thousand dollars. As a share of your income, that's really substantial," says Phillips.

If someone on, say, $300,000 received an inflation-linked pay rise, they would stay in the same marginal tax bracket (45% above $190,000) but would pay a slightly higher share of their income overall.

The increase in tax would be comparatively small and less likely to be noticed by the taxpayer.

"A dollar to a low-income person is worth a lot more than a dollar to a high-income person," says Phillips.

Additionally, retirees generally aren't hit by bracket creep because they're not earning much, if any, income.

Repairing the Budget

The amount of extra tax an individual taxpayer pays after a year or two of bracket creep might not be much on its own, but for all taxpayers it adds up to a large pot of money for government coffers.

The Parliamentary Budget Office (PBO) says bracket creep will have an important role to play in repairing the Budget and reducing government debt.

PBO research shows that if the then Morrison government hadn't introduced the Stage 3 tax cuts, bracket creep would have raised an additional $276 billion, or 8.1% of GDP, in the decade to 2031-32.

The research is from late 2021, so is no longer current, but it gives an idea of the hundreds of billions of dollars available to governments that don't adjust tax rates.

In this way, bracket creep is politically expedient. It's always unpopular for a government to increase taxes, so it's much easier to sit back and let inflation do the hard work.

Along with being a painless way to raise income tax revenue, bracket creep also provides governments with more flexibility on fiscal policy. In an inflation outbreak, for instance, bracket creep allows the government to cool the economy by taking out more cash via a larger tax take.

Governments can also gain political capital by announcing income tax cuts, even if they are just returning bracket creep and the taxpayer isn't taking home any more money in real terms than they were a couple of years ago.

The tax cuts introduced by the Albanese government in its March 2025 Budget are the most recent example. A worker on average earnings of $79,000 will get a tax cut of $268 in 2026-27 and $536 a year from 2027-28, compared with 2024-25 tax settings. This only slows down bracket creep for a couple of years, however.

Analysis by economist Chris Murphy, a visiting fellow in economics at the Australian National University, suggests bracket creep is increasing.

In the first two decades of this century following the introduction of the GST, governments took an average of 22.9% of Australians' incomes in tax. The rate moved up and down from year to year as bracket creep took effect and governments cut tax rates, creating a jagged, sawtooth pattern.

But Murphy says that since then tax cuts haven't been giving back all the bracket creep increases and so the total tax take has risen to 24.3% in the current financial year. Without further tax cuts, it will rise to 28.1% by 2035-36.

"There might be further tax cuts in the future, but on the other hand there might not be, given that we have started to see this upward trend and that the Budget includes a projection that it will get back into balance in 2035-36, 11 years into the future," says Murphy.

"But that's only on the assumption that bracket creep is not returned."

And because bracket creep hits low-income earners harder, it means Australia's tax system is becoming less equal, he says.

Bracket creep surfaced as an issue in this year's Federal election, with then Opposition leader Peter Dutton describing it as a "killer in the economy" that stifles productivity, entrepreneurialism and hard work.

How to deal with bracket creep

Indexation is about the only practical solution to bracket creep, but it isn't an idea that politicians are clamouring to adopt.

And the ANU's Ben Phillips says governments in effect do index tax rates, but do so on an ad-hoc basis. He notes there have been 20 income tax cuts in the past 40 years.

Australia isn't alone in suffering from bracket creep.

The UK froze income tax thresholds in 2021-22 and this has resulted in a sharp increase in the number of taxpayers in the highest tax band of 45%, from 4.4 million to 6.3 million, according to an analysis by the accounting firm RIFT.

It says that bracket creep has been "particularly punitive" in recent years as inflation in the UK hit double digits in 2022 and 2023.

In Australia, Mark Chapman, director of tax communications at H&R Block, says a lot of taxpayers are subject to bracket creep, but most don't notice it.

"It's not until it's pointed out to them - which the media is very good at doing - that taxpayers really notice," he says.

Chapman sees bracket creep as punitive. For instance, the top tax rate for someone earning $130,000 is 30%. But a couple of years of 3% pay rises would push their income over $135,000 and they would pay a top tax rate of 37%.

"You haven't actually done anything to deserve that," he says.

"You haven't got a promotion or anything. You haven't got a better job. You're simply doing the same job you've always been doing. But now you're suddenly paying tax at 37% on some of your income rather than just 30%," he says.

Chapman suggests a couple of things taxpayers can do to mitigate bracket creep.

The first is to ensure they claim all the deductions they're entitled to, noting that large numbers of taxpayers fail to do this.

The second is salary sacrificing to reduce taxable income, for example, by putting pre-tax money into a superannuation fund or towards the purchase of a vehicle.

How inflation takes its toll

Bracket creep hits people on low incomes harder than those on high incomes. And it has a disproportionate impact on those whose need for cash is highest.

As such, its biggest effect is on millennials (1980-1994) and gen Z (1995-2012) who are starting their careers and probably earning less.

The examples below assume an inflation rate of 3% and that wages rise by the same amount. While the real-world economy is rarely so neat, they are nonetheless illustrative of the effects of bracket creep.

Gen Z worker
Annual income $67,000

Australians aged 21 to 34 years of age earn an average of $1289.20 a week, or $67,038 a year, according to the Australian Bureau of Statistics in 2024. The figure includes full-time and part-time work.

A worker earning this amount would pay just under $11,000 in tax, calculated at the tax rates for 2024-25, excluding Medicare.

If this worker received two 3% pay rises over two years, their total income would rise to $71,120 and they would pay $12,124 in tax.

So, after the two pay rises, they would receive $1134 in the hand each week. Two years earlier they were receiving $1078.

That's an extra $56 a week, which sounds as if it could be useful.

But if inflation rises by 3% - the same as their wage - then they would need to receive $1144 in the hand just to have the same spending power.

The effect of bracket creep means that they are $10 a week worse off, despite receiving two pay rises and despite staying in the same marginal tax bracket.

Annual income $45,000

For those whose wage rises push them into a new tax bracket, the effect of bracket creep is even greater.

A worker earning an annual income of $45,000 pays $4288 in tax and pays a top tax rate of 16%. If they receive two annual 3% pay rises, as for the worker earning $67,000pa, their pay will rise to $47,730 and they'll pay $5107 in tax.

Their after-tax weekly income would rise from $783 to $820 - a useful $37 for someone on a relatively modest income.

However, to keep up with two years of 3% inflation they would need to have received $831 in the hand. It means that they are, in fact, $11 a week worse off.

Millennial worker
Annual income $112,710

The average pay for a full-time worker aged 34 to 44 years - someone in the millennial age group - is $112,710 a year. They would pay $24,601 in tax.

If they received two 3% pay rises, their pay would be $119,574 and they would lose $26,660 in tax. Their take-home pay would rise from $1694 to $1786 a week.

This is an extra $92 a week, which could be very useful for a millennial struggling to pull together a home deposit or meet high mortgage repayments, as well as possibly paying school fees.

But, once again, inflation has its corrosive effect. To keep up with 3% inflation, their weekly pay would need to be $1797. They, too, end up $11 worse off.

Stage 5: Setting up an inheritance 

For adult children watching their parents re-partner, it can be easy to think "there goes the inheritance". And there can be a certain amount of truth to this.

One of the challenges of second and subsequent relationships lies in providing for children from a previous relationship.

It's an area that can be fraught with peril. For blended families, having an up-to-date will may not be enough.

Wills can be - and often are - subject to legal disputes.

This is not a 'lifestyles of the rich and famous' issue. One Australian study found that 60% of contested estates are valued below $1 million and just over half are worth less than $500,000.

Fortunately, there can be solutions.

Elise Fordham, principal lawyer at Australian Family Lawyers, says these include having a binding financial agreement (BFA) with your new partner, which sets out who keeps what if you separate, or a "well thought-out estate plan, which would include a will and placing your assets in a testamentary trust".

Another possibility is nominating dependent children in a binding death nomination for your superannuation or through a life insurance policy that lists your children as the beneficiaries."

Even so, Lindzi Caputo, wealth management director at HLB Mann Judd, says the division of assets can be complex in blended families, especially where there are children from previous relationships plus children from the current relationship.

"It's important that each partner considers how they would like their share of the family wealth distributed - firstly if their partner survives them, and then also upon the passing of the surviving spouse," says Caputo.

It can be complex stuff.

Just to add to the mix, Caputo says: "Consider the portion of the estate you'd wish to be distributed to children. For instance, are you happy for all children of the family to receive an equal share of the family assets? Or would you prefer each partner's share to be split among their own biological children?"

As every family is different, Fordham says: "Your options are best discussed in unison with a specialist family lawyer and a specialist wills and estates lawyer to cover off all bases."

Where to from here

Love may be blind but no one should walk blindly into a relationship hoping it will all work out. If it doesn't, the toll on your financial wellbeing can be devastating.

As a family law expert who has seen just how badly things can go wrong, Elise Fordham has an overarching piece of advice:

"Don't wait until it is serious. Plan ahead, get great advice and bring up issues early. Some discomfort early on can truly save you a huge headache later."

And no matter how seductive it may be to hand the reins of financial control to your partner, always stay engaged.

As Glen Hare puts it: "Both partners don't have to be equally involved in day-to-day money management. In my own relationship, I manage most of the finances, but I make sure my partner knows the 'why' behind the financial decisions I make."

Stage 6: Managing the great wealth transfer

In our ageing - and increasingly wealthy - population, the so-called great wealth transfer is expected to see baby boomers leave significant wealth to their heirs - an estimated $224 billion in inheritances each year by 2050.

Yet it's something few people plan for.

Research by Generation Life confirms that close to seven out of 10 Australians want to leave a legacy for future generations, but only one in seven (14%) have a plan in place to do so.

Felipe Araujo, chief executive officer at Generation Life, says 34% of Australians use their superannuation to leave a legacy.

However, super was never designed to be a vehicle for estate planning, and a solid chunk of a super death benefit, up to 32%, can be lost to tax.

Moreover, as a non-estate asset, the fund trustee has discretion over who inherits super even when a binding nomination is in place.

Adding to these complexities, Australians are living longer. Around 70% of inheritances go to people aged in their 50s and 60s, by which stage many beneficiaries have already amassed their own wealth.

Araujo says all these factors are driving change.

One in five (21%) Australians wants to skip adult children and pass their legacy to grandkids, according to Generation Life.

"We are seeing growing interest among grandparents to give their grandchildren a healthy financial start in life, for example, by bequeathing the funds to buy a first home," says Araujo.

"Others want to provide for family members with special needs, or make provisions for complex circumstances such as blended families, to ensure a bequest will make a lasting difference."

It's not just about giving younger generations a financial head start.

"People can be concerned about the potential for relationship breakdowns among their adult children. Or they may be looking at the impact of a blended family," says Araujo.

Estate planning tools such as testamentary trusts can be used to address these issues. But products such as investment bonds can tick several boxes for modern estate plans.

Investment bonds work a bit like a managed fund. A lump sum is invested and can be added to over time. From an estate planning perspective, investment bonds offer several advantages.

To begin with, funds held within an investment bond do not form part of an estate and are, therefore, not subject to the same challenges as a will.

The money can be paid direct to a beneficiary in a lump sum, a regular income stream or a combination of both.

This makes investment bonds ideal for beneficiaries with special needs, young children (think grandchildren) or those who may lack experience managing large sums of money.

Moreover, as investment bonds sit outside of probate, the proceeds can be paid confidentially, reducing the risk of fuelling family disputes.

Investment bonds are particularly tax effective as the investment bond provider pays tax on investment returns at the company rate of 30%.

The  investment bond holder doesn't even have to include the investment earnings in their tax returns.

After 10 years, the investment bond can be redeemed tax-free. So, no tax is paid by the beneficiary of an investment bond - even if the money is pledged to a minor.

Unlike other complex estate planning tools, which can be costly, investment bonds can have an initial minimum investment of just $1000, making them widely accessible.

Stage 3: Divorce and protection

In many cases, though not always, couples have a pretty good idea that their relationship is on its last legs and the question becomes 'when', not 'if', to call it a day.

The process of disentangling a shared life is not just emotionally difficult, it can also be financially devastating.

The Australian Institute of Family Studies found that although women are more likely to initiate divorce, they are far more likely to suffer financially, especially if children are involved, which is the case in one in two divorces.

Mothers typically take the major responsibility for raising children. In doing so, their job advancement (and income) is often put on hold.

This can make it worth thinking about counselling as a possible means of salvaging the relationship. Organisations such as Relationships Australia can provide low-cost services that allow couples to share a non-judgmental space.

Dividing up your life together

If you know the relationship is over, it's time to get down to the nitty-gritty of dividing everything you have accumulated as a couple. Two points are worth noting.

First, when it comes to a property settlement, all the assets owned jointly and individually will be pooled and divided.

Squirrelling away assets before you separate won't prevent them being added to the pot of property to be divided.

Similarly, embarking on a massive spending spree using your former partner's credit card is likely to be counterproductive. The money could just be deducted from your share of a future property settlement.

The other issue is that in Australia we have 'no fault' divorce. As galling as it may be, it doesn't make a difference to a property settlement if your ex has had multiple affairs while you have remained faithful throughout.

An exception, according to Ian Shann, is where the relationship has been marred by family violence, which can shape how property is divided.

He says that, in general, under the Family Law Act a property settlement will be determined by a three-step process that looks at:

1. The value of the pot to be divided (the 'pot' being assets less liabilities, or debts)
2. The contributions of each person, including non-financial contributions such as renovations to a home or caring for children and doing housework, at the beginning and during the relationship 
3. Whether there are any special factors (such as future needs) that should be considered in determining the financial split.

Shann notes that without a binding financial agreement (BFA), if you cannot decide together how your property will be split, the Family Court will make the decision based on the points listed above.

And it's a fair bet you could end up with a settlement neither of you is happy with. Moreover, the cost can be prohibitive.

"Disputes that go to trial in the Family Court can take several years to settle and cost more than $100,000 per person," warns Shann.

"When a relationship breaks down, parties should seek to have financial matters resolved as quickly, simply and inexpensively as possible.

"Get legal advice about how the law is likely to work, but then get matters resolved as amicably as possible by using an alternative dispute-resolution process like mediation. It will be quicker, less expensive and less confrontational, and allow you to move on with respect, which is really important if you are co-parenting."

Shann adds that a family mediation can cost each party around $1500.

How your assets are valued 

The million-dollar question facing many separating couples is who gets what. These days, it really can be an issue worth $1 million - often considerably more. With so much of our wealth seemingly up for grabs, it's at this stage that the true cost of divorce can hit home.

While a 12-month separation is required to apply for a divorce, you can get started on the property settlement straightaway. And it's worth forging ahead with it.

The assets to be divided will generally be valued as at the date of your settlement (the family home may require a formal valuation).

The main point is that anything each person owns up to the date of settlement is officially up for grabs.

If, for example, you win the lottery after separating, or score a six-figure redundancy payout, it can all go into the pool of assets to be shared. In this way, dragging the chain doesn't just make it harder to put the whole thing behind you, it can also end up costing you more than expected.

Cracking the super nest egg

Superannuation goes into the assets to be divided, though it is subject to special treatment.

That's largely because super is held in trust and can't normally be accessed until preservation age, which is 60 years for those born on or after July 1, 1964.

Once you know the value of your combined super savings, you need to determine how to split the benefits.

On this score, couples have a few options:

• Divide super savings on the spot - you can choose to divide up your combined super savings through a split that states how the total pool of savings will go to each person, for example, 50:50 or 80:20 or whatever you agree on.
• Defer a decision to a future date - in this case, a super account will be 'flagged', meaning the trustee is advised not to make any payments from the fund until a future date.
• Skip taking a share of super altogether.

Dividing your super on the spot allows everyone to get on with their lives. However, unless you have met a condition of release - normally this means reaching preservation age - the money remains in the super system. So, it won't be available to pay bills today.

Even so, your future self will thank you for including super in a property settlement. This especially applies if you have limited super of your own, which may be the case if you have spent time out of the workforce raising children or caring for ageing relatives.

Taking care of children

With close to half of every divorce involving children, caring for the kids is something most couples are likely to face following a break-up. Family law sets no hard and fast rules about which parent a child will live with. Rather, a court will assess what is in the 'best interests of the child'.

Here, too, a lot of time and money can be saved working things out amicably with your ex.

If you can't, Ian Shann explains that it is a legal requirement for couples to undertake alternative dispute resolution - that is, mediation, before they head off to do battle in the Family Court.

"Mediation is a prerequisite to court proceedings because it has a high success rate, and this significantly reduces the number of cases that would otherwise end up in litigation," says Shann.

"Around 80% of couples get care of children sorted through mediation. Only 20% end up in court."

Navigating child support

Similarly, both parents have a duty to support their kids financially after separation. This applies regardless of who the children live with. This support can take a variety of forms including:

• cash payments made direct to a parent
• non-cash items, such as paying health insurance or school fees or
• a combination of cash payments and non-cash items.

Child support can be a contentious issue between separating couples as it can be viewed as a thinly veiled form of 'alimony' or spousal maintenance (which it isn't).

Shann notes, "It's not uncommon for a parent to seek that children spend more time with them, thinking this might reduce the child support for which they are assessed," says Shann.

"Perhaps they might consider that it will probably cost more to have the kids with them for that extra time than the savings in child support."

The common thread is that child support can call for negotiations on both sides. Parents who can't reach an agreement can apply for a child support assessment by Services Australia. The formula used is complex, but broadly speaking, the end result is based on:

• each parent's income 
• how much time each parent cares for the child
• the child's age.

If you plan to work out child support yourselves, it pays to think long term. Child support normally ends when a child turns 18, but the cost of raising kids can extend well beyond this.

Stage 4: Re-partnering and blended families

Despite the dubious odds of a second marriage being a long-term coupling, there is no shortage of people who emerge from a broken relationship eager to try their hand at another.

One in four marriages involves couples who've already walked down the aisle at least once before. Many more will enter a new de facto relationship.

While our capacity to commit to new relationships is seemingly endless, things are undeniably different second (or third) time around. It's not so much that we are more jaded or less starry-eyed. The fact is that people often have more to lose.

The average age at divorce is 47 for men and 44 for women. By this point in life, couples have often built significant assets.

Separation can mean halving those assets. When it comes time to enter a new relationship, we can, understandably, be keen to protect what's left.

One possibility to protect remaining wealth is through a binding financial agreement.

We noted earlier that this isn't a common option among first-time couples. But Elise Fordham, principal lawyer at Australian Family Lawyers, says she sees more of an interest in BFAs among couples who are re-partnering.

"The overarching theme in the consultations with these clients is wanting to try to protect themselves from the stress of another unpleasant divorce, or wanting to protect their assets for their children," she says.

"We also see people later in life wanting a BFA and estate planning documents so they can ensure their accumulated wealth will be passed onto their children when they pass away."

What to talk about this time 

Fordham suggests anyone considering re-partnering should have "very open and honest conversations about money before 
you cohabitate".

She recommends talking in detail about your incomes, expenses, money goals and whether you will keep your finances separate or combine them.

Also up for discussion is what will happen if one person loses their job or wants to retrain for a new career, and how bills will be paid if you have a child.

"We have seen many people come to us after a separation where they came into the relationship with wealth, or they have accumulated wealth during the relationship. They have felt used by the other person squandering it - by not working to their potential, or starting several failed businesses that have wasted funds, and they then need to go through the property settlement process," says Fordham.

She adds that a BFA can make a lot of sense for those finding love later in life.

"You set out the terms of the division of your property and finances early on - either before you get into a de facto relationship, or before a marriage, or during a relationship."

Stage 5: Setting up an inheritance 

For adult children watching their parents re-partner, it can be easy to think "there goes the inheritance". And there can be a certain amount of truth to this.

One of the challenges of second and subsequent relationships lies in providing for children from a previous relationship.

It's an area that can be fraught with peril. For blended families, having an up-to-date will may not be enough.

Wills can be - and often are - subject to legal disputes. This is not a 'lifestyles of the rich and famous' issue. One Australian study found that 60% of contested estates are valued below $1 million and just over half are worth less than $500,000.

Fortunately, there can be solutions. Fordham says these include having a BFA with your new partner, which sets out who keeps what if you separate, or a "well thought-out estate plan, which would include a will and placing your assets in a testamentary trust".

Another possibility is nominating dependent children in a binding death nomination for your superannuation or through a life insurance policy that lists your children as the beneficiaries."

Even so, Lindzi Caputo, wealth management director at HLB Mann Judd, says the division of assets can be complex in blended families, especially where there are children from previous relationships plus children from the current relationship.

"It's important that each partner considers how they would like their share of the family wealth distributed - firstly if their partner survives them, and then also upon the passing of the surviving spouse," says Caputo.

It can be complex stuff. Just to add to the mix, Caputo says: "Consider the portion of the estate you'd wish to be distributed to children. For instance, are you happy for all children of the family to receive an equal share of the family assets? Or would you prefer each partner's share to be split among their own biological children?"

As every family is different, Fordham says: "Your options are best discussed in unison with a specialist family lawyer and a specialist wills and estates lawyer to cover off all bases."

That moment when you meet the person you want to spend the rest of your life with is life changing - and that feeling of being able to live on love alone, no need for mundane things such as food or water to sustain you.
Plenty of Australians fall in love each year.

And around 120,000 couples (close to 250,000 people) formalise it each year by getting married. Many more enter de facto relationships.

This love is something to be celebrated. And to be clear, many Australians will enjoy long and loving relationships. But it is a fact of modern life that many people will discover theirs is not a 'till death do us part' situation.

As in many developed nations, Australia has a high rate of relationship breakdown.

Ian Shann, family lawyer and principal of Perth-based mediation firm Move On, says no one expects their relationship will end in separation or divorce.

"But the reality is that about 30% of first marriages end in divorce, while second and subsequent marriages have a divorce rate of around 60%. Throw in de facto relationships and the overall figure is closer to 50%," he says. No one thinks it will be their special relationship that goes bust, but the odds are fairly reasonable that it will.

The grim statistics don't stop people looking for a life partner. The growth of dating apps is testimony to this. Why do we do it? As Shann notes, "There is no end to hopefulness when people enter a relationship."

While the odds are slightly in favour of a lasting relationship, if things get rocky you could end up nursing a lot more than a broken heart. Separation and divorce can have a devastating impact on personal wealth. The division of assets, plus contributions towards the cost of raising children, can strain household cashflows and significantly diminish personal wealth.

In fact, money can be a leading cause of relationship conflict. A 2024 survey by Relationships Australia found cost-of-living pressures are a key issue in many relationship breakdowns.

This being the case, if you can sort out financial matters at an early stage, you may have crossed a major hurdle and be on track to enjoy a lasting relationship. If not, it's important to know how to protect your wealth.

Here's what to consider in each life stage.

Stage 1: Starting a relationship

Money matters are probably the last thing on your mind at the start of a relationship.

But Glen Hare, co-founder and financial adviser at Fox & Hare Financial Advice, says there are three core financial issues people should consider when things start getting more serious.

Look for the red and green flags

This stage of a relationship is the ideal time to identify problem areas that could signal trouble further down the track.

"First, look at your partner's relationship with money," says Glen. "Are they risk averse or more aggressive in their money management?

"Second, are they comfortable talking about money? Our personal views around money can be shaped by many factors, including friends, family and work colleagues.

"Third - and most importantly - do your partner's goals align with your own? For example, is your partner keen to buy a home, start a family or take extended leave from work for a sabbatical in the next few years?"

As Hare notes, the financial decisions we make at a younger age contribute to building the life we want to lead. "If you want to buy a home and your partner doesn't, it's likely you will each manage your money in different ways."

Money talk matters 

The only way to know how your other half deals with each of these factors is to have conversations about money. The catch is that these discussions don't always come easily.

"In any relationship, one person is likely to be keener to talk about money than their partner," says Hare. "However, it can help to start conversations where money is the enabler."

This means talking about what you both want to achieve in life and how your financial decisions are aligned to these goals. "If you both want to buy a home in the next few years, you may need to talk about this year's holiday being in Bali instead of Europe," says Hare.

"The key is aligning money decisions with shared goals. If you are not working towards the same goals, there probably isn't a lot of longevity in the relationship."

Stage 2: Living together - de facto or married

This is where things get real - when you and your partner share a home. Official 'coupledom' brings important considerations. Notably, whether you're seen as a couple in the eyes of the law.

Under Australian family law, you may be regarded as being in a de facto relationship if you and your partner have lived together for at least two years.

This isn't the only benchmark, though.

If you share a home, have a sexual relationship or hold yourself out to others as being a couple, you can be viewed as being in a de facto relationship.

This matters because if you break up, all assets can be on the table - yours and theirs - to be divided up in a property settlement. It's a stark reminder to look beyond the early bloom of romance and recognise the possible financial ramifications.

Testing the waters 

The days where couples automatically pooled all their cash are increasingly behind us. A Finder survey found six out of 10 Australian couples share their money equally (see table, opposite). However, this differs widely between generations. Baby boomers (77%) were the most likely to share finances equally, compared with Gen X (61%), Gen Y (58%) and Gen Z (31%).

That said, around 84% of couples have a joint account, and it can be a simple way to gauge your financial compatibility while also having a practical role to play.

"If your intention is to live together, it can help to open a joint account where each person contributes an equal amount for shared household bills," says Hare. "This alone can be the first prompt for a numbers-based conversation."

Your partner's willingness to go along with a joint account can speak volumes.

"If they can't commit to this, it can be a red flag," says Hare.

Take a 'household' view

The contribution to living costs in a joint account doesn't have to be split 50:50. A higher-income earner may contribute more than their lower-income partner. Hare says it can help for couples to take a 'broader household' view rather than clinging to a 'yours and mine' approach.

This can be particularly important when the relationship progresses to growing savings, buying a home and building a portfolio of investments together. That's because tax can play a role in whose name various assets are held.

"Tax is important in a relationship," says Hare. "One partner almost always earns more than the other, and it makes sense for investments to be held in the name of the lower-income earner as they will be on a lower marginal tax rate. Yes, this involves trust and looking at things from the broader household perspective."

As a guide to how this can work, Hare cites the example of a de facto couple he recently advised. The man had a $400,000 mortgage on an owner-occupied home and a small balance in the loan's offset account. His partner had savings of around $250,000, having just sold an investment property.

"It made financial sense for the $250,000 to be deposited in the offset account rather than held in a separate savings account," says Hare. From a household perspective, the savings on loan interest would far outweigh the interest income his partner would earn.

"The challenge for couples in this position is whether they are comfortable combining their finances to this extent," notes Hare. However, one person who earns more may have higher personal wealth. This doesn't mean their partner contributes less to the household.

"Finance is just one element a person brings to a relationship," says Hare.

What's mine (isn't) yours

A pre-nuptial agreement, known as binding financial agreement (BFA) in Australia, is a legal contract that clarifies who gets what if the relationship ends. It can be entered into and updated at any stage of a relationship. In this sense, a BFA can be seen as an insurance policy to protect your financial position if things go wrong.

But they're not the answer for everyone. It's estimated that fewer than one in five Australian couples has a BFA in place. There are good reasons for this.

Ian Shann believes a BFA "can save a huge amount of grief later on" but notes intending couples may feel it's not a great way to prepare for a long-term marriage. Beyond the psychological hurdle, young couples often don't have much in the way of wealth to protect.

A bigger issue can be the cost. Shann says the formalities behind a BFA can be onerous. As a result, a BFA can cost around $5000 per person.

Glen Hare says that among his clients, who have an average age of 34, the question of a prenup arises only occasionally and is typically triggered by one of two situations.

The first is where one member of a couple has seen a breakdown in their parents' relationship and the impact this can have.

The second is when one person in a couple has received a large inheritance. "They often feel a sense of obligation to keep the money in the family," says Hare.

"In this circumstance, their partner often accepts the idea of being carved out of the inheritance [by a BFA] as there tends to be a psychological disconnect from the money or inherited asset."

The picture is becoming more complex as the Bank of Mum and Dad plays a growing role helping adult kids buy a home. Shann says this can see a couple face outside pressure to sign a BFA, giving parents reassurance that their financial contribution to buying a home doesn't end up in the hands of their child's estranged spouse.

The picture for BFAs can be different for older or re-partnering couples.

Life admin for new couples

Among the excitement of setting up a home together, couples need to tick off a few life admin matters.

One of these is having life insurance in place.

"Life cover isn't for you, it's for your partner," says financial adviser Glen Hare. "Your need for cover should be triggered when you have either debt or children. Importantly, both partners should have appropriate life cover to reduce the strain on the household if the unexpected happens."

Another step to address is drawing up a will. Hare recommends having a will in place from the time you move out of home and start growing personal wealth.

"It can be very cost effective to organise a will in your 20s as most people typically just state who will inherit their entire estate rather than nominating a beneficiary for every single asset," he says.