Things You Need to Know When Hiring a Live-Out Caregiver in Canada


So you do not want to have a live-in caregiver through the Canadian live-in caregiver program, and decide instead to go the live-out route.  Well below are some things you will need to know when hiring a live-out caregiver in Canada.

1. If you are thinking about circumventing the rules and paying your nanny cash, remember this is a lose-lose situation.  First of all, if the government catches you not only will they assess you and make you pay the amounts which should have been paid to the CRA, such as paying tax, contributing to the Canada Pension Plan, Employment Insurance, and buying workplace insurance, but they will make you pay the employee portion as well.  In addition, you lose the $7,000 deduction on your taxes, and your nanny loses her right to collect Employment Insurance if she gets laid off.

What usually happens in that case is the nanny gets laid off, tries to collect EI, is informed by HRSDC that she is not entitled because she has not been paying into the plan at which point she provides records of payments and then the government is looking for you.  Yes, it is more difficult to do but it also rarely ends well.

2.  Make sure you have a HRSDC approved labour contract clearly spelling out the details of the job, much as you would sign with your employer.  It’s all the same.  They’re generally categorized as domestic workers and they have rights to feedback, clearly defined breaks, details around pay, vacation, overtime, expectations, roles and responsibilities.  Long gone thankfully are the days where potential employers feel that Canada is better than Hong Kong so it’s okay to stretch working hours, responsibilities or ignore breaks.  Getting an agreed upon contract creates good relations between you and outlines exactly everything which can keep you from getting in trouble down the road.

3.  What do I need to know about paying my nanny?  Well, as the employer, nannies are not self-employed, you have to treat them in a manner in which you would want to be treated and that means with respect.  You negotiate the contract and if there are issues with performance, you have to address them in a respectful manner, much in the same way your employee has venues to complain about your treatment, including suing you for wrongful dismissal.

This step-by-step guide to payroll deductions should help getting you on the way and around the fear of the CRA;

Step 1 – Call 1.866.959.5525, the Canada Revenue Agency business help line, follow the prompts for payroll / source deductions accounts and ask the customer services representative for a business (or BN) number.

Step 2 – You have the BN set up in your name, so now you need the information on your one employee, your nanny.  Gather from her on the contract her full name, SIN and live-out address.  You’ll need this later…

Step 3 – Next you will need to figure out how much you will need to remit to the CRA each month.  You can do this by entering the amount you have paid your nanny into the CRA payroll calculator; http://www.cra-arc.gc.ca/tx/bsnss/tpcs/pyrll/tbls-eng.html.  The calculator breaks down how much you will need to remit for taxes, EI and CPP.  This link also provides other information on being an employer, rights and responsibilities.  Read this if you have time or need something to help you get to sleep.

Step 4 – Monthly remittance of the held back funds (deductions of source pay).  By the 15th of month you will be filling out the remittance voucher sent to you from the CRA – unless you sign up to remit online (check My Account).  You remit on the 15th for the previous month, so on June 15th you are remitting for May 1st to 31st.  On the form you need the gross pay, net pay, EI, CPP, month remitting for, number of employees and tax withheld.  For me, the quickest is to take that to the bank on the 15th (16th if the 15th is a Sunday, 17th if the 15th is a Saturday, and 18th if the Monday is a holiday and the 15th is the Saturday.  The bank stamps the form, takes the funds from my account and takes the remittance voucher.  Done.

Step 5 – Keep the copy of the remittance voucher with the bank stamp in a file as you’ll need it when filing your personal income taxes (T1) each year and providing your nanny a T4 by February 28th of the following year.

4. Most often asked questions surround legal obligations, such as; when ending a contract with your nanny, if she gets sick, falls pregnant or gives notice.  First off, be sure that the contract with your nanny establishes the length of notice needed if one of you wants to end your working relationship. Any penalties for not meeting that notice period should be spelled out in your contract too.  As for the other things, just put your self in her shoes and change the employer from you to a large firm.  Would your employer allow you to take short-term disability time off or long-term disability time off?  Absolutely!  By law they are required to and the same goes for your caregiver.  If she falls pregnant you cannot fire her for the same reasons.  If you need help, seek an employment lawyer.

But with all that being said, if the separation is mutually agreed upon, remember you will need to provide your nanny with a Record of Employment (ROE) within 8 days of her last day of work.  Don’t wait!  This is a controlled form to prevent EI fraud, so reach out to Service Canada right away and they will send you a kit with the details on how to do this.

5.  Where can I get a contract?  I recommend Googling “HRSDC approved nanny contract.”  It will lead you to complete the key sections of  the contract which cause the most headaches down the road, specifically; Overtime, training, duties she cannot legally perform for me, tracking of expenses – petty cash, and holiday pay.

 

I hope this provides some insight and helps clear up some lingering issues around what to do with live-out caregivers in Canada.  All in all, just remember to treat your employee with the same respect you would want to be treated as an employee.  Karma’s a bitch!

20 thoughts on “Things You Need to Know When Hiring a Live-Out Caregiver in Canada

  1. Julia April 20, 2015 / 13:34

    This is a great post but the CRA business phone number has changed to 1-800-959-5525

    Like

  2. Nick January 23, 2016 / 23:38

    Hi UD, thanks for this post. Just a note that HRSDC is now ESDC (Employment and Social Development Canada). Took me a little while to figure this out.

    One question for you — we’re just about to hire a P/T, live-out nanny here in Vancouver and we’re doing it above-board after having a negative experience with an under-the-table nanny late last year. I’ve gone ahead and signed up for a CRA businees number and payroll account.

    Our next step is looking for some help with all of the various tax (EI/CPP, payroll, etc.) filings. I’m looking at a few online services that offer this kind of thing — Wave Accounting Payroll ($14/mo.), CanadianNanny.ca’s nanny payroll offering ($39/mo.), etc. Are there any of these services you’d recommend?

    Thanks,
    -nick

    Like

    • The Urban Daddy January 27, 2016 / 21:04

      Hi Nick. Thanks for that note! They do change the names often, eh? When I started working for Revenue Canada, they changed the name to the Canada Customs and Revenue Agency and when we finally got all the letters changed over to that name, after about 5 years, they changed it to the Canada Revenue Agency… If you look for tax documents you still see the “RC” which stands for Revenue Canada. LOL.

      Relating to your question, I like both of those services but it comes down to experience and time… If you are familiar with the CRA’s payroll calculator, you can figure out the amounts to be remitted, and send in that monthly remittance all on your own.

      If, however, you are busy (as most parents are) and there is a chance that you might miss a month here and there, then a payroll service is perfect because they take care of the calculations, the remittance amounts, and the T4 and T4 summary at year end. Some will even provide a service for the ROE should there be a parting of the ways.

      It’s worth it if it’s one less thing you have to worry about. $168 or $468 per year is a fair cost to avoid a $400 late filing penalty or the hassle of having over remitted and trying to get that money back.

      Hope this helps!

      Regards,

      Warren

      Like

  3. nickb January 31, 2016 / 21:40

    Thanks Warren, appreciate the feedback. I’ve been digging around (as you suggested above) for ESDC-approved nanny contracts, but I’m not having much luck finding any examples or templates to work from.

    Would you be able to post a link to one (or more) that you think is worth using as a base/template?

    Cheers,
    -nick

    Like

    • The Urban Daddy February 9, 2016 / 11:57

      Hi Nick, I know I’ve posted one on this blog… Its’ a big older but I’ll find it and post the link.

      Like

  4. Dave French February 4, 2016 / 11:00

    Hey Urban Daddy,

    Found this post and would like a bit of clarity. I’ve read the thread from ANONYMOUS on FEBRUARY 18, 2014 but I have some clarifying questions.

    We have paid our Nanny a set amount since she arrived in April 2015 (doesn’t work overtime). In turn, our monthly remittance remained constant until the recent minimum wage boost in October here in Alberta (monthly remittance changed at that point). I’m submitting her T4 online and I don’t know how to calculate her “insurable earnings”. In my search, her insurance earnings would only be her room and board. Correct?

    So lines in her T4 would look like:
    Employment income 14 – Total salary (including room and board which is deducted afterwards)
    EI Insurance premiums 18 – Set amount
    CPP Pensionable earnings 26 – Set amount
    Income tax deducted 22 – Set amount
    EI insurable earnings 24 (total value of her room and board)

    Your assistance is appreciated.

    Like

  5. Jo June 19, 2016 / 20:40

    Hi,
    I’m trying to fill out an ROE for my sitter. It asks me the name of my organization and my title. Not really sure what I should put down? any ideas because I don’t have a business as such! I’m a little confused by how to go about this.

    Like

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