As the year wraps up, many Canadian household employers have one big question on their minds: “Am I doing this payroll thing right?” If you have a nanny or caregiver on payroll, the end of the year can come with a few extra to-do’s, and naturally, a few grey areas.
We’ve rounded up some of the most common year-end questions from NannyTax clients to help you finish the season with confidence (and keep the CRA happy while you’re at it!).
1: Do I have to issue a T4 if my nanny only worked for a few weeks?
Yes. If you paid your nanny or caregiver more than $500 in the calendar year or deducted CPP/QPP, EI, PPIP, or income tax from remuneration paid to your employee, you’re required to issue a T4 slip. This includes temporary, part-time, and seasonal workers. Even if they left your employment earlier in the year, a T4 is still needed for the income and deductions from that period.
For reference: CRA T4 Filing Guidelines
2: Are holiday bonuses taxable?
Yes. Any cash bonus, gift card, or monetary reward is considered taxable employment income. It should be included in your nanny’s year-end pay records and T4. If you’re offering a non-cash gift, the CRA allows non-taxable gifts up to a $500 fair market value annually under certain circumstances.
CRA breakdown: Gifts and Awards
3: How do I report reimbursements for things like transit or supplies?
Reimbursements for reasonable work-related expenses (like transit fares for school pick-up or craft supplies used with the kids) are not taxable, provided you keep receipts and the expenses are directly related to the job. However, if you give a flat allowance (e.g., $50/month with no receipts), that may be considered taxable.
4: What’s the deadline for issuing T4 slips?
T4 slips must be issued by the last day of February. For the 2025 tax year, that means February 28, 2026. Both the employee copy and the CRA submission must be completed by this date. If you’re a NannyTax client, don’t stress, we handle this on your behalf.
5: What happens if I overpaid or underpaid taxes during the year?
It depends on the size of the discrepancy. Small differences can often be corrected on your T4 summary or through a reconciliation. If you’re off by a large amount, you may need to remit the shortfall or contact the CRA to resolve it. Late remittances can result in penalties or interest.
CRA resource: Payroll Deductions and Remittances
6: Do I need to notify anyone if my nanny took a leave or quit?
Yes. If there’s a break in employment, you’re required to submit a Record of Employment (ROE) to the CRA. This is necessary even for temporary leaves (like parental leave or summer breaks) if there’s a pause in payment.
More on that in our blog: What to Know If Your Nanny Is Taking a Leave
7. What documents should I keep on file for year-end?
CRA recommends keeping the following payroll documents on hand. This includes:
- Timesheets
- Pay stubs
- TD1 forms (federal and provincial)
- T4 slips and summaries
- Any CRA correspondence
Backups (physical or digital) are a must in case of audit or review.
8: Can I do Nanny payroll and T4s myself?
Technically, yes. But many households find it overwhelming to keep up with calculations, deadlines, and CRA requirements. That’s why NannyTax offers full-service payroll support that includes remittances, pay stubs, ROEs, and year-end T4s.
Let us take the stress off your plate.
9: Do I need to account for vacation pay on my nanny or caregiver’s T4?
Absolutely. If you paid out vacation pay as part of regular paycheques (the common 4% model), it’s already included in gross earnings. If you paid it out as a lump sum or at year-end, make sure it’s added to their T4 totals. Any vacation pay owing but not paid should be addressed before issuing year-end slips.
Related read: What You Need to Know About Nanny Vacation Pay in Canada
10: Should I review or adjust my nanny’s contract at year-end?
The start of a new year is a great time to revisit your caregiver’s contract.
- Hours and availability
- Wage or benefit changes
- Sick leave and holidays
- Role responsibilities
Also review statutory holiday pay and benefit entitlements. Keeping the contract up to date protects both you and your nanny.
For help: New Year, New Contract: Updating Your Nanny or Caregiver’s Employment Agreement
Need help with nanny or caregiver payroll?
Being a household employer isn’t easy, especially during the holidays. If you’re juggling family, festive plans, and year-end payroll stress, we’re here for you.
Reach out to us anytime at taxquestions@nannytax.ca or 1-877-626-6982. We’ll help you close out the year smoothly.Related reads:
• Year-End Nanny Payroll Checklist