There is no legislation preventing you from employing your family members in your business.
However, it is important that you are aware of your obligations in relation to employing related parties. The rule of thumb is that you cannot pay above what the ATO considers as ‘reasonable’. The challenge though is that there is no list as to what is reasonable.
If you are seen to pay over the reasonable amount you may be denied a tax deduction for the amount paid. The employee would however, be taxed on the amount paid to them.
The other query I often have is whether or not superannuation needs to be paid on wages paid to related parties. The short answer is yes. These employees need to be treated exactly as a normal employee.
A good rule of thumb is always to ask yourself – if this was not my son/daughter or other relative would I pay them this amount?