A Tradie's Guide to Hiring and Paying Family Members
12 October 2026 · 6 min read · By Heaney Accounting
Many trade businesses start as family affairs, but adding a spouse or child to the payroll isn't as simple as just moving money around. If you want to claim their wages as a legitimate business expense, you need to follow strict documentation and market-rate rules.
The Golden Rule: Genuine Work and Market Rates
The ATO requires that any family member on the payroll must perform genuine work for the business. You cannot simply pay a family member to reduce your overall tax burden; the work must be necessary, and the wage must be comparable to what you would pay an unrelated employee for the same tasks.
- Draft a formal employment contract for the family member.
- Keep detailed timesheets that record exact hours and duties performed.
- Pay the wages directly into their own bank account.
- Ensure you are withholding PAYG tax and paying superannuation if applicable.
- Review the work output regularly to justify the wage level.
Warning: If the ATO audits your books, you must be able to prove that the work was done and that the payment was reasonable for the service provided. If you can't provide proof, the tax office may disallow the deduction, leading to tax penalties.
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