Trouble Calculating Nanny Tax?

A Nanny Tax Expert Shares What You Need to Know to Hire a Nanny

#1) I am slow in the kitchen.
My calling is not in chopping broccoli, and my family can attest to that.

#2) I don’t love crafts.
I envy the Moms who have a MacGyver type ability to create an intricate craft out of a popsicle stick, tissue paper, and a piece of string. It’s just not my thing.

#3) I love math.
I even have a degree in it. My non-mathy friends rely on me to split the bill and figure out the tip at the end of a meal. Not exactly the same level as the fundamental theorem of calculus or statistical regression analysis, but that’s OK!

The apple doesn’t fall far from the tree. When my eldest son was recently given a place mat and crayons at a restaurant, he complained that he hates colouring. So, I offered to write a math test for him on the back of the mat and the two of us were in heaven!

What does a Yummy Mummy with three young children, who isn’t good at kitchen duty or craft creations do about childcare? I have a nanny – and there is no shame in that! When I have time to relax, I can concentrate on my family or friends and know that the toilets are clean. It is truly liberating.

But then again – the time required to clean the toilets is replaced with crunching numbers! As the employer of a live-in caregiver, I need to keep up with minimum wage, room & board maximums, Workplace Compensation Board premium rates, vacation, and of course – tax changes. “YUCK” you say? I say “Bring it on!”

If you employ a nanny, then you know that you need to have a payroll deductions account with the Canada Revenue Agency (CRA). Hopefully, you also know that you probably need to register with your provincial Workplace Compensation Board. Didn’t know that? You are not alone!

I can’t tell you how many times I have had people tell me that they find their nanny’s pay confusing. Why? We tend to discuss caregiver wages in terms of their paycheque amount rather than gross salary. This makes calculating payroll tax deductions more complicated (or fun, depending on your perspective) than normal. It also makes budgeting for monthly childcare more challenging.

Throw in the taxable benefit of room & board if your nanny is live-in and it makes heads spin! Some people believe that they don’t need to include this as part of their nanny’s payroll taxes. But the CRA says that if your employee is given free room & board, then the employee is receiving a taxable benefit and the fair market value of the meals and accommodation must be added to their pay.

So, there is plenty to do to take that precious time away from your family even when you have a nanny. Only instead of cleaning toilets, it is crunching numbers! Definitely my preference, but it isn’t for everyone.

Deborah Shure is the founder and owner of Shure Consulting Services – Canada’s provider of payroll taxes services for nanny or elder-caregiver employers. She has been involved in nanny payroll tax solutions for over six years and still loves it! Her clients maximize on tax savings with personalized payroll tax updates, T4 and T4 summary, Record of Employment (if required), and more. For “nanny tax frustration relief”, visit, call toll-free at 1-877-NANNYTAX (626-6982) or locally in the GTA at 905-326-3222.