Avoiding the Frustrations of Canadian
Nanny Tax Paperwork!
by Deborah Shure www.nannytax.ca
It wasn’t easy – but you finally found what
you are hoping will be the perfect nanny! And now you
quickly realize there is a host of new responsibilities
when becoming someone’s employer. From figuring
out nanny taxes, CPP, and EI, to vacation time/pay, sick
days, statutory holidays, and the list goes on. Confused?
You are not alone and there is help where you need it!
Navigating all your sources of nanny tax and payroll
frustration can be daunting: How do you (‘the employer’)
get a Canada Revenue Agency (CRA) payroll deductions account
set-up; what should be included in the contract with your
nanny (‘the employee’); should you register
with the Workers’ Compensation Board; are the benefits
you are providing such as room & board, a bus pass,
or payment of an airline ticket taxable; are the taxable
benefits considered insurable income for EI premium purposes;
...head spinning yet??
After you have figured all that out, there is still
more paperwork to keep up with!! Here’s what you
need to know to fulfill some of the Canadian nanny tax
- TD1 form – you have probably filled one of
these out yourself when starting a new job. Any new
employee needs to fill out a TD1 Personal Tax Credits
Return form so that their employer knows how much tax
to deduct from the employee’s pay.
- Pay slip – when you hand your Nanny a pay cheque,
you also need to hand over a pay slip. Information on
the statement is detailed and is outlined by employment
standards. Make sure you keep copies of the pay slips
for your records.
- CRA remittances – amounts payable to the Canada
Revenue Agency are due on the 15th of the month following
payroll. It is up to you to figure out how much to remit
for taxes, CPP and EI. Unlike your gas bill, the form
you receive from the CRA will be blank!
- T4 and T4 summary – when the calendar year
is over, and before February 28 of the following calendar
year, you will need to prepare and give a T4 to your
Nanny. A copy of the T4 also goes to the CRA with a
T4 summary which shows the total earnings and deductions
from all employees. Make sure to file on time, or a
penalty will be assessed.
- Record of Employment – whenever an employee
has an interruption in earnings, a Record of Employment
needs to be completed. This form is required for various
reasons including if the employee wishes to apply for
Employment Insurance. Forms are available from Service
Canada – not the CRA. All of the immaculate record
keeping you have been doing will now pay off since you
will need to report insurable hours of work and earnings
over a particular number of pay periods!
So, you thought that having a Nanny was going to make
life easier? Well, it does – but it also opens up
a whole other host of responsibilities – ones that
don’t need to frustrate or confuse you!
Shure Consulting Services – www.nannytax.ca
– 1-877-NANNYTAX (1-877-626-6982)
home | shopping
| shows | tips
& articles | enter
free guide |advertise
| contact us
© The Baby and Toddler Guide