Can I pay my spouse as a contractor instead of an employee and avoid STP?

 Author: KaraATO(Community Support)Community Support

ATO Certified Response12 May 2026

Hi @Belinda401,

It all depends on how it’s structured and whether the arrangement with your husband would technically mean they are an employee or contractor. Even though the payee is your husband, this doesn’t affect whether they're treated as an employee or a contractor.

If you engage your husband as an employee, you’ll need to register for PAYG withholding, and report through Single Touch Payroll (STP) each time you pay.

This can apply even for temporary or irregular arrangements. You'll also need to pay superannuation where appropriate. STP-enabled software is required to report salaries or wages paid, tax withheld, and super contributions.

If you pay your husband under a contractor arrangement:

• your husband will invoice you for the services and be responsible for their own tax and super obligations, and
• you won't need to use STP or withhold tax, and
• your husband needs to have an active ABN to operate as a contractor.

Where your husband’s yearly turnover is below the GST threshold of $75,000, it’s optional to register for GST.

The key difference is that employees require you to withhold tax and use STP, while contractors manage their own tax affairs and invoice you as a business-to-business transaction. It's important to correctly determine whether the arrangement is employment or contracting, as this affects both your obligations and your husband.

Based on your questions, it would be a good idea for your husband to read through the material on our website. We have a lot of handy info on what to do before starting a business. 

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