Employment Insurance
Live-in nannies in Canada are covered by Employment Insurance (EI). This provides them with benefits should they lose their jobs through no fault of their own. In order to be covered by EI, the employer must deduct a certain amount from the nanny’s paycheck each month, along with their own contribution. The amount must be remitted to the Canada Customs and Revenue Agency.
The same is true in order for your nanny to qualify for the Canada Pension Plan. Each month, the employer deducts a certain amount from the nanny’s paycheck, matches it, and submits it to the pension plan so that the nanny will have a cushion to look forward to.
Statement of Earnings
Employers of nannies are strongly encouraged to accompany each paycheck with a statement of earnings, which will include gross earnings and the amount and purpose of each deduction. This will help both employers and nannies when it is time for employers to provide a T4 form to their nanny each year.
For some of the most common questions about taxes and nannies, visit here: http://www.ccra-adrc.gc.ca