Hiring a Nanny in Canada: Payroll, CPP, EI and the Real Cost to Your Family

Hiring a nanny in Canada usually makes you an employer. The Canada Revenue Agency generally treats a caregiver who works in your home, on your schedule, as your employee, which means you register a payroll account, deduct CPP, EI and income tax from each pay, add your own employer share, remit it, and issue a T4. In 2026 the employer share alone is 5.95 percent CPP on earnings above the basic exemption and 2.282 percent EI outside Quebec. Provincial employment standards set minimum wage, overtime and vacation pay. The real cost is the gross wage plus those amounts, minus what the child care expense deduction saves you.

Employee or self-employed?

CRA looks at the working relationship: who sets the hours and duties, who supplies the tools, and whether the worker runs a business. A nanny who cares for your children in your home, on your schedule, is generally an employee. A licensed home daycare that cares for several families' children in its own home is a business, and you pay it a fee. If you are not sure, CRA can issue a ruling on employment status. Getting this wrong can leave you owing both shares of CPP and EI later.

Payroll steps for a household employer

1. Open a payroll program account with CRA before the first pay.
2. Get the nanny's SIN and a completed TD1 (and the provincial TD1) to set income tax.
3. On each pay, deduct CPP, EI and income tax. Use CRA's Payroll Deductions Online Calculator.
4. Add your employer CPP (equal to the employee's) and employer EI (1.4 times the employee's).
5. Remit to CRA by the due date, generally the 15th of the following month for a regular remitter.
6. Issue a T4 slip and file the T4 return by the end of February.

Provincial employment standards

Minimum wage, hours of work, overtime, public holidays and vacation pay are set by your province or territory, and domestic workers are generally covered. Read your province's employment standards page for domestic or live-in workers, which can have special rules about room and board, overtime or hours. A written agreement that lists duties, hours, pay, vacation and notice saves arguments later.

Workers' compensation also varies by province. In some provinces, coverage is required for domestic workers above a set number of hours. Check your provincial workers' compensation board before the first day.

Quebec employers

In Quebec, a household employer deducts Quebec Pension Plan contributions and Quebec Parental Insurance Plan premiums instead of CPP, along with a lower EI rate, and remits to Revenu Québec as well as CRA. Revenu Québec's employer pages have the rates and forms.

The child care expense deduction

Wages you pay a nanny for child care can count as child care expenses, up to $8,000 per child under 7, $5,000 for ages 7 to 16, and $11,000 for a child eligible for the disability tax credit. The deduction is generally claimed by the lower-income spouse. A receipt from an individual caregiver must show their SIN. The T778 guide covers the rules. In B.C., the Affordable Child Care Benefit has rates for care in the child's home; see the B.C. guide.

Example with made-up inputs: monthly cost of a $3,000 wage

These numbers are an example with made-up inputs, outside Quebec, for one month of a $36,000 annual wage paid monthly. Employer CPP is 5.95 percent of $3,000 less one-twelfth of the $3,500 exemption ($291.67), or about $161.15. Employer EI is 2.282 percent of $3,000, or about $68.46. The family's cost before any provincial items is about $3,229.61. The nanny's deductions come out of the $3,000; they are not an extra cost to you, but you must remit them.

Add vacation pay, public holiday pay and any workers' compensation premium your province requires. Then compare the total with licensed options in the $10-a-day guide.