Understanding Tax Obligations When Hiring Family Members
31 August 2026 · 5 min read · By Heaney Accounting
Bringing a family member into your business can help with admin, bookkeeping, or onsite tasks. However, the Australian Taxation Office (ATO) scrutinizes these arrangements closely to ensure they are legitimate commercial agreements rather than just a way to shift income.
Setting a Market-Rate Wage
You must pay your family member a wage that reflects the work they actually perform. If you pay them significantly more than what you would pay an unrelated employee for the same role, the ATO may flag this as a tax avoidance tactic.
- Check the relevant industry award for the specific job description.
- Document the hours worked with accurate timesheets.
- Keep an employment contract on file for the family member.
- Ensure payments are made through your payroll system, not just a cash transfer.
Pro Tip: Even if it is your spouse, they are still an employee. You must withhold tax, report through Single Touch Payroll, and pay superannuation if they meet the eligibility criteria.
- Register the family member as an employee in your accounting software.
- Issue a Tax File Number declaration form.
- Establish a consistent pay cycle, like weekly or fortnightly.
- Pay the superannuation guarantee on time every quarter.
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