Most people will hire a nanny for 8 hours a day, five days a week, which equals forty hours.
The minimum wage for a live-in caregiver in Ontario is currently
Special note about minimum wage. (Local area nannies most likely will not work for minimum wage). Most people start paying the bare minimum for the nanny, that is fine (for a newcomer from overseas it is okay) at the beginning while her performance is being evaluated. But please consider raising her salary after a few pay-periods. Almost nobody does this, yet even a 10 cent increase (per hour) will make a huge difference for the nanny. It will show an appreciation for her hard work and always remember, monetary compensation goes farther than mere words.
See below for a breakdown of the cost to have a nanny.
40 hours times 10.86/hour = $434.40 per week gross salary.
- Federal Tax 25.64
- Provincial Tax 13.91
- CPP 17.99
- EI 8.10
$430.80 minus $65.64 equals $365.16
The Room & Board of $85.25 is also subtracted from the Nannies salary.
Where the employee is paid minimum wage and has been provided with room and/or board, the employer is deemed to have paid the employee the amount allowed for room and/or board. The employer must therefore pay the employee (before deductions for such things as CPP , EI or income tax) the difference between the minimum wage for all hours worked and the amount deemed to have been paid for room and/or board.
$365.16 minus $85.25 equals $279.91
The sum of $279.91 is what you would pay the nanny per week (net pay).
The amount to remit to the government is:
- Federal Tax for Nanny $25.64
- Provincial Tax for Nanny $13.91
- CPP for Nanny $17.99
- EI for Nanny $8.10
Total for Nanny $65.64
There is an additional contribution which has to be paid by the employer only.
This is calculated by adding an additional amount for CPP for Employer $17.99
and EI times 1.4 which equals $11.34
Total additional amount from employer only: $29.33
All CPP, EI, Federal Taxes and Ontario Taxes add up to:
$65.64 from the nanny’s salary plus $29.33 from additional employer contributions.
The chart for the room & board is here:
$85.25 comes off the nanny’s salary for room & board (for employer).
Reserve 4% for vacation pay $17.23 (Ontario)
Remember that you must pay the nanny’s income tax, CPP and EI; employers are also required to pay CPP (1X) and EI (1.4X) on the employee BUT this does not come off the nanny’s salary, rather it is over and above it
As an employer you are required to give the employee two T4 slips by the end of February each year (Revenue Canada sends the appropriate forms and the appropriate times). A Record of Employment is also required for the Nanny upon request.
It seems that some employers don’t register with WSIB, however it is a very low lost investment to protect the Nanny and the Employer from any costs associated with an injury on the job which would cause lost wages (for the nanny) or “nanny unavailable” (for the employer).
WSIB approx. $13.60 per week
WSIB stands for: (Workplace Safety and Insurance Board)
In this case, for a live-in caregiver the WSIB rate group is for Residential Home Operations (# 852)
Using the above example with minimum wage, 40 hours a week.
Taxes to Remit $94.97
Vacation Pay $17.23
When you hire a nanny, you are able to use the following deductions on your income tax in Ontario:
Annual child care expense amount is:
* $7,000 for each child under 7 years of age at the end of the year;
* $4,000 for each child over 6 years of age at the end of the year and under 16 years of age at any time during the year; or
* $4,000 for each child over 15 years of age throughout the year who has a physical or mental infirmity and is dependent on the taxpayer, the taxpayer’s spouse or common-law partner