I am returning to work part-time in January, with the possibility of transitioning to a full-time schedule a few months later. 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?
Kathleen W-S. e-mailed us at expert@sweetspot.ca; our tax expert, Gila Ossip, answered:
In short, there’s no minimum. 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 consider a nanny to be your employee because you, as employer, decide the hours she works, what tasks she performs and even provide resources to perform the job (toys, your home etc). If you rely on the same caregiver weekly for your children, this “employer” status applies.
If CRA considers you an employer, you must prepare payroll remittances. This means you make deductions for Canada Pension Plan (CPP), Employment Insurance (EI) and income tax from your nanny’s pay, plus make an employer contribution to CPP and EI on the caregiver’s behalf. If you employ a nanny for more than 25 hours/week, you also pay WSIB* (Workplace, Safety and Insurance Board) premiums.
The upside is employer contributions to CPP, EI and WSIB aren’t significant expenses. Example: Your nanny works 20 hours/week, and is paid $15/hour (gross). With a total salary of $300/week, the employer’s cost for CPP, EI contributions is under $20/week*.
In summary, it’s better to contribute upfront than be subjected to interest and penalties later.
*Calculations and WSIB threshold referenced are for Ontario. Other provinces may differ slightly.
Chartered Accountant Gila Ossip is a mother of two, with 10-plus years of financial experience. Gila founded Tax4Nanny as an affordable, turn-key solution for those who want relief from the headaches of government-related paperwork and tax filings for nannies and other caregivers.