After searching for the perfect nanny, how are you going to pay her?
In determining the nanny’s status as an employee or as an independent contractor, Canada Revenue Agency (CRA) does the following tests:
- Control: Are you specifying the work to be done? Are you specifying the working hours and are you reviewing the work that was done?
- Tools & Equipment: Are you retaining the right of use over the tools and equipment that the nanny uses for the work? Are you supplying the necessary equipment for the nanny to use to care of the children (e.g. high chair, crib, stroller) when the nanny is at work?
- Financial Risk: Are you reimbursing the nanny for costs of children activities (e.g. entrance fee for zoo, Science World or a play group)? Are you reimbursing the nanny for the costs of transportation during work time?
- Integration: Do you have a continuous relationship with the nanny?
If you answered “NO” to all of the above questions, your nanny is an Independent Contractor. She must supply you with an invoice and you pay her the amount that is on the invoice.
If you answered “YES” to any of the above questions, your nanny is deemed as your Employee and you are the Employer. This is regardless of whether your nanny is full time, part time, live in or live out.
As an Employer you are responsible for providing a contract of employment for your employee. You have the right to choose the nanny/worker, and set the terms and conditions of employment. You are also responsible for making sure those terms and conditions meet the conditions required under the province’s Employment Standards Act.