Ending a relationship that lasts for a long time, even years, is never fun. However, sometimes it is necessary, like in the case of a nanny. Your children will grow up and will no longer need a nanny once they are grown up enough to be trusted with independent tasks. Nannies are godsends when children are young and both parents are working. They will care for your children and help them develop as human beings.
However, life can throw you for a loop. Sometimes, contracts are ended prematurely for a multitude of reasons. If that happens between you and your nanny, you still have nanny tax obligations you and your nanny need to meet.
Hopefully, this guide will help answer any and all of your questions that you may have regarding ending a contract with a nanny while considering your nanny tax obligations.
Step 1: Consult your Provincial or Territorial Ministry of Labor
Labor laws are stringent and always changing. What is reality one day may not be reality the next. No matter how well-intentioned you and your nanny may be to end his or her contract amicably, it makes sense to follow the law exactly, so no issues arrive later on. I.e. if the Canada Revenue Agency requires something that you do not think you need to file.
Contact your ministry and ask them to advise you and your nanny on ending a contract, as well as your nanny tax obligations. They will help you and can give you specialized advice that you need.
Step 2: Make Sure the Contract is Followed
Until the contract between you and your nanny is officially expired, follow it, especially payment requirements, unless you cannot. Sometimes, one or both parties to a contract will create a verbal agreement, or a secondary contract that is not notarized, to end the contract early. For instance, a parent may contract a nanny for his 8 year old daughter but, halfway through the year, he may need to move to a new town for work. As a result, his nanny cannot work the full contract. At that point, both the parent and the nanny should consult with a labor lawyer and a nanny tax consultant so they can end the contract earlier.
Step 3: Prepare a Record of Employment (ROE)
Regardless of whether you and your nanny fulfill the terms of your contract, or end it early, you need to send your nanny a Record of Employment. It is essential you do so because it is an official document that sums up their work history for you. If you need help obtaining a Record of Employment or you have some questions regarding the process, you can contact Service Canada.
Ending a contract does not need to be a complicated matter. Nanny tax can be calculated, collected, and sent in to the Canada Revenue Agency with ease. While it is a simple process, some people like assistance when doing so. Contact the Ministry of Labor for your province or territory can help. Specialized staff members with specialized information regarding cases just like yours can help you and your nanny end a contract easily. Contact them to learn more.
Nanny tax does not need to be complicated. Paying nanny tax does not need to be either, especially when you are ending a contract with your favorite nanny. To learn about nanny tax and how to collect it, you should contact Tax4Nanny in Toronto. GTA homeowners and employers of nannies use professional accounting services in order to file it correctly. For more information, please visit us at our website today.