Question
Dear Tax4Nanny,
I am returning to work part-time in September. I’m currently weighing out my childcare options (and budget) to see what will work best for my family. What is the minimum number of hours per week that a nanny must work to have EI and CPP deductions a requirement?
Sincerely,
Helen M.
Answer
Dear Helen,
The quick answer to this question is that there is no real minimum and you must start paying immediately.
Canada Revenue Agency (CRA), considers you to be an employer if you employ an individual on a regular basis. CRA would not consider a nanny to be self-employed because you as the employer decide what hours the person is working, what tasks should be performed and even provide the resources to perform the job (the toys, your home, etc). If you rely on the same caregiver each and every week to take care of your children, this would apply to you.
If you are considered by CRA to be an employer, then you must submit payroll remittances. This means you need to deduct CPP, EI and tax from your nanny’s pay, and as an employer contribute to CPP and EI on behalf of your caregiver. Also, if you employ a nanny in Ontario for more then 24 hours a week, you need to pay WSIB* (Workplace, Safety and Insurance Board) premiums on top of this.
The good news is employer contributions to CPP, EI and even WSIB are not significant expenses. For example, if you were employing a nanny for 20 hours a week and paying the nanny $15 an hour (gross) for a total salary of $300/week, the cost to you for employer CPP and EI is under $25 a week*.
In summary, it is better to be conservative and contribute then be sorry later and be subject to interest and penalties.
Sincerely,
Gila Ossip, CA, MBA
*The calculations and WSIB threshold used in this article are based on Ontario residents. Other provinces may differ slightly
