Introduction
Hiring a nanny, cleaner, carer or gardener for your home can make you an employer, even if the arrangement is informal, part-time or paid straight from your bank account. Many households find out only when the worker asks for a payslip or the ATO asks questions.
This guide covers classification, PAYG withholding, superannuation, workplace obligations, reporting, recordkeeping, and how household employment differs from contracting. Thresholds and dates change, so check them against current ATO, Fair Work and state or territory guidance before acting.
Key Takeaways
- Classify the worker first. An ABN, invoice or job title doesn't decide it.
- Check TFN, PAYG withholding, super, payslips, leave and workers compensation.
- Record hours, wages, tax, super and leave from the first pay run.
- Get advice for multiple workers, past payroll gaps or cross-border residency.
Determine Whether the Worker Is Your Household Employee
The ATO looks at the whole set of contractual rights and obligations, following the High Court's Personnel Contracting and Jamsek decisions. The ATO's guidance says a label doesn't settle status, and no single factor does either.
Control, delegation, equipment, risk and whether the worker delivers a specific result all matter.
Fair Work applies its own test. From 26 August 2024, the whole-of-relationship test looks at the real substance and practical reality of the arrangement. Treat the ATO and Fair Work tests as separate questions.
Likely employees
- A nanny working to your family's schedule
- A regular carer following your instructions
- A cleaner whose hours and duties you set
The Fair Work Ombudsman says nannies are most often employees, and its example nanny is covered by the Miscellaneous Award.
Likely contractors
A genuine contracting business typically:
- Sets its own methods and supplies its own tools
- Invoices several clients
- Carries commercial risk for the result
A gardening firm that quotes a fixed price and sends its own crew is a typical case.
Situations needing a closer look
- Agency workers: if the agency provides and pays the worker, you generally don't withhold.
- Live-in staff and au pairs: accommodation doesn't decide status; regular, controlled work points to employment.
- Casuals, family members and multi-household workers: no blanket exemption applies.
- Workers with an ABN: an ABN or invoices don't automatically make someone a contractor.
Misclassification can amount to sham contracting under Fair Work rules, with penalties and back pay. When in doubt, weigh the full working arrangement carefully and get advice before you decide.
Understand the Tax and Employment Obligations
Employment-law basics
Keep these separate from tax. For national-system employees, the National Employment Standards set minimum entitlements. Give each new employee the Fair Work Information Statement.
Put duties, hours, pay and leave in writing, and check whether an award applies. Cleaners, gardeners and carers hired directly may fall under different awards or none, so check each role.
Western Australia treats direct household employment as state-system employment, with its own minimum conditions.
PAYG withholding
The ATO expressly includes nannies, carers, cleaners, gardeners, housekeepers and directly engaged NDIS support workers. You register for PAYG withholding before paying an employee.
A household employing only domestic workers doesn't need an ABN and can obtain a Withholding Payer Number (WPN). Get a TFN declaration from each employee and lodge it within 14 days.
The worker still declares the income in their own tax return.
Superannuation
- Rate: 12% for 2026-27, with a maximum contribution base of $270,830.
- Hours test: domestic or private work needs more than 30 hours a week. Exactly 30 doesn't qualify.
- Payday Super: for earnings paid from 1 July 2026, contributions generally reach the fund within 7 business days of payday.
- Earnings base: qualifying earnings include ordinary time earnings and commissions, but not overtime.
Workers compensation and payroll tax
Rules vary by state. Queensland expressly requires household worker insurance. Tasmania deems a domestic servant a worker after 48 hours' total employment. The NT generally excludes household workers unless earnings pass 20% of average weekly earnings.
Don't assume home insurance covers this. There is no blanket household exemption from payroll tax, so check your state revenue office.
Reporting and payslips
WPN holders are exempt from Single Touch Payroll until 30 June 2033. Non-STP withholding is reported through payment summaries and the annual report. Fair Work-covered employees must get a payslip within one working day of payday. An STP income statement doesn't replace it.
Allowances and benefits
The ATO separates allowances from reimbursements of actual expenses. Reimbursements can raise fringe benefits tax questions. Accommodation, meals and bonuses need individual review.
Follow the Reporting Process Step by Step
- Collect information. Get the TFN declaration, bank and contact details, super fund details and emergency contacts. Treat TFNs carefully; the Privacy (Tax File Number) Rule 2015 governs how you collect, store and dispose of them.
- Set up payroll. Calculate gross wages, withholding, net pay, super, leave and allowances from timesheets, not from bank transfers alone.
- Pay and report. Register for PAYG withholding, use the right withholding tables, then report through the route that fits your WPN or agent arrangement.
- Reconcile. Check totals reported to the ATO, the fund and the employee against timesheets and payments, during the year and at year-end.
- Correct past errors. For unwithheld wages, missed super or misclassification, seek advice.
- Missed super: the ATO offers voluntary disclosure, which can reduce the administrative uplift. Pay the fund and keep records.
- STP errors: corrections can update the income statement; tell the employee.
- Underpayments: the Fair Work Ombudsman says notify affected employees and pay back pay in full as soon as possible. Claims can reach back six years.
Set Up Payroll and Keep Accurate Records
You may not need an ABN, but you do need PAYG withholding registration before the first payment. Don't assume household employment is treated like a business; confirm each requirement.
Keep records of:
- Employment terms and duties
- TFN and super fund details
- Hours, gross and net pay, payment dates
- PAYG amounts and super contributions
- Leave balances and reimbursements
- Payslips, ATO reports and state filings
- Related correspondence
The ATO generally expects payroll records for 5 years. Fair Work requires employment records for 7 years, kept legible, in English and accessible. Keeping to the longer period is the safer rule. Store records securely in one consistent system.
Meet Deadlines, Avoid Mistakes, and Know When to Get Help
Compliance calendar
| Item | Timing |
|---|---|
| Pay run | Payslip within one working day |
| Super (from 1 July 2026) | Within 7 business days of payday |
| TFN declaration | Lodge within 14 days |
| STP finalisation | 14 July, unless WPN-exempt |
| Non-STP annual report | 14 August |
| Workers compensation, payroll tax | Check your state regulator |
Confirm PAYG payment schedules on the ATO's deadline pages.
Common mistakes
- Treating a worker as a contractor because they have an ABN
- Paying cash without records
- Ignoring super
- Using US forms such as the W-2 or Schedule H, which don't apply here
- Overlooking leave entitlements
- Leaving earlier errors uncorrected
When to get help
Get professional support if you deal with:
- Multiple household employees
- Live-in arrangements
- Disputed classification
- Arrears or an ATO review
- Cross-border residency
- Unfamiliar state rules
VJM Global supports Australian tax, payroll, accounting and compliance work, and can help you set up and check your obligations.
Frequently Asked Questions
What is the minimum income I need to report to the ATO?
Household employers report wages under current ATO payroll and income-reporting rules. Check the ATO for the thresholds and lodgement method that apply to your situation.
Do I need to give my household employee a payslip?
Yes. Household employers follow ATO payroll reporting, keep income records and meet Fair Work payslip requirements for eligible workers.
Who is considered a household employee for taxes?
Someone who performs services in or around a private home under the household's control. Status turns on current ATO and Fair Work principles.
What does household employer mean?
An individual or family that engages a worker for domestic services. They may carry payroll, super, workplace and reporting duties.
Can I claim a deduction for household employee wages?
Household wages are not automatically deductible, and any claim needs separate analysis. The ATO treats private childcare costs as non-deductible.
