Yes—but only if done through the trustee, and under strict legal, fiduciary, and taxation conditions. This article examines the legal mechanics of employing individuals under a family trust in Australia, including trustee powers, fiduciary constraints, employment law compliance, and tax implications. It also explores how these obligations change depending on the nature of the employee—such as a trustee, beneficiary, or unrelated party.
No, a family trust itself cannot be an employer because it is not a separate legal entity. Under Australian law, a trust is a legal relationship, not a person or company. It must act through its trustee, who holds legal title to the trust property and enters into contracts—including employment contracts—on behalf of the trust.
Therefore, while a family trust cannot hire staff directly, its trustee can lawfully employ people if permitted under the trust deed and if the employment furthers the trust’s purpose. In practice, it is the trustee who becomes the legal employer.
A family trust can employ staff—via its trustee—when the following legal conditions are met:
If these requirements are not met, the trustee risks breaching fiduciary duties and triggering personal liability.
A trustee must not only comply with employment law but also meet fiduciary obligations imposed by trust law. This includes:
Trustees who improperly employ individuals, mismanage payroll, or benefit personally from employment arrangements may be found in breach of trust and personally liable.
Yes—but strict conditions apply depending on the role.
In both cases, trustees must document the arrangement clearly and seek professional advice to ensure compliance with fiduciary obligations and taxation law.
While both family trusts and companies can engage employees, they operate under different legal frameworks:
For this reason, legal practitioners often recommend a corporate trustee or a hybrid structure for family businesses employing staff, to limit liability and simplify compliance.
Employing staff through a trust triggers standard employer obligations, including:
Failure to meet these obligations can lead to penalties, audits, and in serious cases, trustee disqualification.
Legitimate scenarios where a family trust may lawfully employ individuals include:
Each scenario must be reviewed for legal validity, commercial necessity, and documentation adequacy.
A short transition before the questions:
The legal ability for a trust to employ raises a host of related questions. Below are common search-based queries and expert-informed answers.
This creates a fiduciary conflict and is generally not recommended. Any such dual role must be authorised in the trust deed and structured with independent oversight to avoid breach of duty.
Yes, if the role is legitimate and pay reflects fair market value. However, employment income must be kept separate from discretionary beneficiary distributions.
The trustee must comply with all employer obligations, including PAYG tax, superannuation contributions, and STP reporting. Trusts are treated the same as any other employer.
Yes. An ABN is necessary for registration with the ATO, hiring employees, and meeting compliance requirements such as PAYG withholding and BAS lodgements.
Only if the work is real and the compensation is arms-length. Paying wages without substantiated work may be viewed as tax avoidance and could invalidate deductions.
Employment permissions depend more on the deed than on trust type. However, irrevocable trusts often require stricter adherence to original terms and may have less flexibility.
Yes. The trustee must obtain workers' compensation insurance in accordance with state law. Failure to insure can lead to severe penalties.
While a family trust may employ staff in Australia, it cannot do so independently. The trustee, acting within their legal authority and fiduciary duty, bears the full responsibility of compliance.
From the deed to Fair Work to the ATO, employment under a trust is legally valid—but only when carried out with precision, legal advice, and ongoing administrative rigour.
For trustees considering hiring under a family trust, seeking legal review of the deed and obtaining accounting guidance is strongly recommended to avoid regulatory exposure and personal liability. Families unsure where to begin may first want to explore how to find a good family law lawyer, ensuring access to tailored advice on structuring trust employment arrangements lawfully.