Paying Nanny Annually
(Montreal, Quebec, Canada)
CRA Requires Monthly Or Quarterly Remittances for Nannies
I am paying my nanny annually, she is a student who works part time, and the contract was that, I would pay her yearly on Dec 30th, and that this way she could payoff her tuition without having to spend her pay on unnecessary stuff.
Now my question is, I registered a Business Number in Quebec and got a Payroll deductions account too. So how do I calculate taxes for her yearly pay, and how to report the yearly pay on her T4?
The Toronto Star has an excellent article that is easy to understand on the implications of having a nanny.
"If you hire a nanny to look after your children, you are her employer. That means you are required to withhold taxes, as well as Canada Pension Plan and Employment Insurance premiums from her pay, and match those contributions.
Those taxes must be remitted to Canada Revenue Agency on a monthly or quarterly basis. Each year you need to prepare a T4 slip, and provide a record of employment when the relationship comes to an end."
Read more at http://www.thestar.com/business/personal_finance/2012/03/27/the_tax_implications_of_having_a_nanny.html.
You can calculate payroll deductions by visiting the CRA website's Payroll Deduction Online Calculator. You can find it here .... http://www.cra-arc.gc.ca/pdoc/ .
If you want more information of this topic, Google/Bing the keywords CRA + Nannies.
Return to Ask a Bookkeeping Question.