Can my salary be paid into a family trust? What it means for your take-home pay

Can my salary be paid into a family trust?

If you run a business through a trust structure, you might wonder whether your salary can be paid into that trust instead of to you personally. The short answer is yes — but only if you are a beneficiary of the trust and you are genuinely employed by the trust. The Australian Taxation Office explains that a reasonable salary or wage paid to an employee for work performed is not treated as a distribution for family trust purposes. This means the trust can pay you a salary through its payroll system, withhold tax, and report via Single Touch Payroll, just like any other employer.

However, if you are an employee of another company, that employer cannot pay your salary into your family trust. Your salary must be paid to you as an individual. The trust structure only applies when you are the business owner and the trust is your employer.

What changes your fortnightly take-home pay

Your take-home pay — the amount that reaches your bank account after tax and the Medicare levy — depends on three main factors: the tax brackets, the Medicare levy, and superannuation.

Tax brackets for 2026–27

For Australian residents, the first $18,200 you earn is tax-free. Then:

• $18,201 to $45,000: 15c per $1 over $18,200
• $45,001 to $135,000: $4,020 plus 30c per $1 over $45,000
• $135,001 to $190,000: $31,020 plus 37c per $1 over $135,000
• Over $190,000: $51,370 plus 45c per $1 over $190,000

The Low Income Tax Offset (LITO) can reduce tax for lower incomes, up to a maximum of $700.

Medicare levy

The Medicare levy is 2% of your taxable income. For singles, the latest published thresholds are $28,011 and $35,013. If your income is below $28,011, you pay no levy. Between $28,011 and $35,013, the levy is phased in at 10c per $1 over the lower threshold. Above $35,013, you pay the full 2%. Most full-time employees pay the full levy.

Superannuation

Super is not deducted from your take-home pay if your salary is quoted as 'plus super'. The employer pays super on top. If your salary is quoted as 'including super', the super contribution is taken from your gross pay, reducing your take-home amount. The super guarantee rate is 12% from 1 July 2026, up to a maximum contribution base of $270,830.

Example: minimum wage take-home

The national minimum wage from 1 July 2026 is $26.44 per hour and $1,004.90 per week (38 hours). For a full year, that's $52,255. After tax and Medicare levy, your take-home pay would be approximately $42,000 per year, or about $1,615 per fortnight. This is an estimate only; your actual withholding depends on your tax file number declaration and any other income.

Using a family trust for salary

If you operate your business through a trust, you can pay yourself a salary. The trust claims a deduction for the salary, and you pay tax as an individual. The trust must withhold tax and report through Single Touch Payroll. The ATO warns that if you make distributions outside the family group, Family Trust Distribution Tax applies at 47% (top marginal rate plus Medicare levy). A reasonable salary to a beneficiary who works is not a distribution, so it avoids that penalty.

For more details on how tax and Medicare affect your pay, see our Tax and Medicare guide. To estimate your take-home pay, use the Take-home pay page.

Key points to remember

• Your salary can be paid into a family trust only if you are a beneficiary and employed by the trust.
• Your fortnightly take-home pay is reduced by income tax brackets and the Medicare levy.
• Super may or may not reduce take-home pay depending on how your salary is quoted.
• The minimum wage is $26.44 per hour or $1,004.90 per week.
• Medicare thresholds for singles are $28,011 and $35,013.

Always check with a tax professional before setting up a trust or changing how you receive salary.