If you have a nanny or are thinking of getting one, there are a few things you should know. Linh Tsiu is a Canadian accountant who specializes in Caregiver Tax Services. She handles payroll for caregivers and instructs families in the financial implications of hiring a nanny. As always, in parenting there are so many things to learn. Now that you are an ‘expert’ mother, driver, chef, housekeeper, teacher, manager and scheduling guru – do you really need to handle the accounting too?
In 1992 the Canadian government passed the Live-in Caregiver Program legislation to allow foreign workers to enter Canada to address the shortage of childcare workers in Canada. While this creates opportunities for employers and caregivers, there are many things that people do not realize when hiring a nanny. Some of them include:
1. Hiring a part-time, full-time, live-in, live-out nanny makes you a full-time employer.
2. You must register for a business number.
3. You must remit payroll withholding taxes, which includes the nanny’s income tax, CPP (Canada Pension Plan), EI, (Employment Insurance) and the employer’s portion of CPP and EI.
4. You must provide an accurate T4 to your nanny and file your T4 summary to the
Canada Revenue Agency (CRA) on time. If it is late, the late fee is $25 per day.
5. You have to follow all the Labour standards which includes: vacation pay, statutory holidays, paying the nanny at least twice a month and providing the nanny with a pay stub which has to state the number of hours worked, the pay rate, etc.
6. You must purchase Worker’s Compensation for your nanny.
7. The risk of not having these things in place is that after your nanny contract ends, the nanny can possibly file a lawsuit against you. In many cases the nanny wins because the Canadian legal system primarily protects the employee and they expect the employer to know the standards. In most of these cases the employers simply did not know the requirements in the first place. They did not do anything wrong on purpose, but they ended up paying for that mistake.
8. It is a big adjustment on the entire family, as there is another person added to your family. Plan for an adjustment period.
9. You should spend time with the nanny and get to know the nanny. It is the same as having an employee under them at their work place. Regular reviews, two-way communications, etc. are the key to a successful employer/employee relationship.
– Linh Tsiu is the owner/operator of the business. Linh is a professional accountant (CGA) with 15 years of experience in accounting and business development. Her knowledge, strategies and dedication have helped her past clients to expand their market shares by over 50%. She is creative and flexible individual with excellent interpersonal and communication skills. Linh Tsiu has a Commerce Degree majoring in Marketing and Human Resources.
Linh Tsiu, CGA