April 30 is the deadline to submit personal tax returns. In the months of June, July and August, Caregiver Tax accountant tend to get calls about clients being audited for their personal tax returns – particularly with Child Care expenses.
When the Canada Revenue Agency (CRA) does a personal tax audit, they concentrate on Child Care expenses because they are a direct deduction from income- as opposed to a tax credit (which is normally 15% of the amount). If you employed a nanny and claimed Child Care expenses, have your receipt prepared in case CRA knocks on your door.
The CRA auditor will look for the Medical Service Plan premium, bus pass, room and board and other benefits that may be paid out to the nanny employee but were not treated as a taxable benefit. A taxable benefit is where the nanny employee and the employer would have to pay extra taxes on the amount of the benefit.
CRA normally looks for discrepancies of what is due and what was paid. They go through the bank statements, remittance reports, wage statements and anything they see appropriate. Therefore, this might be the time to get your Nanny payroll bookkeeping and accounting in order – just in case your name is drawn from CRA’s database.
If you get a letter from CRA regarding your Nanny Payroll account, contact us first at 604-786-2566 or email us at email@example.com – we will be able to give you valuable advice before you speak to the assigned auditor!