Don’t Succumb to Myths about Payroll Taxes
Getting a nanny for your children or a caregiver for your parents was supposed to make life easier. Instead, you’ve been thrown into a whirlpool of domestic payroll taxes and employment regulations with no way to get out.
Relax, you got this. However, you should be aware of the truth behind popular myths about payroll taxes before you make costly mistakes. As the leading domestic payroll services in Canada, let NannyTax be your guide.
Myth #1: You Don’t Need to Process Payroll if Your Nanny is Part-Time
Even if your nanny or caregiver only works once a week, the CRA requires you to process their payroll and remit taxes. The CRA’s Employment Guide (T4001(E)) states:
“If you hire a caregiver, baby-sitter, or domestic worker, you may be considered to be the employer of that person. As an employer, you have responsibilities in the employment relationship between you and the person…You are considered to be an employer when all of the following apply to you: hire a person establish regular working hours (for example, 9 a.m.
to 5 p.m.), and assign and supervise the tasks performed.”
Myth #2: Caregivers are Independent Contractors!
While this is one of the oldest tricks in the book, nannies and caregivers don’t qualify as independent contracts according to the CRA. Trying to get out of payroll by claiming them as contractors will only lead to the CRA breathing down your neck with fines in the future.
Myth #3: Nannies Don’t Require Workers Compensation Insurance
The requirement for WCB coverage differs in various provinces. With the coverage, your employee is covered for wage replacement and rehabilitative services should they injure themselves on the job. You can also check with your home insurance to see what coverage they offer for someone employed domestically.
Myth #4: Running Domestic Payroll Taxes Through an Incorporated Business
If you own an incorporated business, you might think you can roll your domestic worker’s payroll into your company’s. This is a dangerous misconception! Employment laws around domestic workers are not always the same as a typical worker’s and you are legally required to keep them separate, as caregivers are not considered direct contributors to a business enterprise according to the CRA.
Myth #5: Nannies Don’t Need Paystubs
Just because you throw your paystub to the wind as soon as it’s separated from your cheque, doesn’t mean you aren’t legally obligated to give one to your domestic employee. Depending on what province you’re in, there is certain information that must be included on paystubs and provided to domestic workers.
Don’t fall victim to silly payroll tax myths. Have your domestic taxes done by one of the most trusted payroll services in Canada for caregivers. At NannyTax, we can take on all aspects of your payroll, including calculating CPP and EI contributions as well as generating T4 slips.
Get started with NannyTax today with a FREE month of services.
