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Tax Advice for the On Call Canadian Nanny

Updated on December 26, 2015
A Nanny, a Bab Bottle and a Canadian Flag
A Nanny, a Bab Bottle and a Canadian Flag

Year End Tax Advice for the On-Call Nanny or Caregiver in Canada

For your information, a Canadian-trained CGA provides tax advice for the on call Nanny in Canada. The on-call nanny is an independent contractor and not an employee. As such, he or she is responsible for their own tax reporting.

For today's on-call nannies who live and work in Canada, getting ready for tax time can be daunting. Sorting through a mountain of paperwork is a most unwelcome chore to anyone with work commitments and family obligations.

Whether you do your taxes personally or simplify your life by using a professional accountant, you must collect, sort and organize the required documents. The year end tax advice and tax tips on this page will help ease the stress of tax season.

This information is provided by a Linh Tsiu, a Certified General Accountant.

Linh Tsui, CGA
Linh Tsui, CGA

About Linh Tsiu, CGA

Caregiver Tax Services

The information on this page has been provided by Linh Tsiu, my friend and personal accountant. Linh is a Certified General Accountant (CGA). She has many years experience working in the field of accounting. Before opening her own accounting practice, Linh worked for companies and corporations. Today, she specializes in payroll and taxation services for nannies and for families that use a nanny service.

Linh is qualified in this area in more ways than one. Not only is she a CGA specializing in this field, she is the mom of two cute kids, and along with her husband, employs a live in nanny.

Linh lives in the Lower Mainland of British Columbia. Thanks to the wonders of the Internet, she is able to perform accounting services for families and individuals living in other areas of Canada.

Linh Tsiu is a Certified General Accountant (CGA) who specializes in payroll and taxation services for nannies and caregivers and for the people who employ caregivers. Linh fully understands the issues facing nannies and their employers. She employs a nanny herself to care for her two children while she tends to her accounting business.

Situated in Metro Vancouver, British Columbia, Canada, Linh performs taxation and payroll services for families and caregivers living in all areas of Canada. Linh particularly enjoys helping people find ways to pay the least amount of tax possible. "Nobody should have to pay more taxes than necessary, " she says.

If you would like to discuss your taxes or ask for Linh's professional services, her contact information is on her web site at Caregiver Tax Services.

Woman Doing Bookkeeping
Woman Doing Bookkeeping

An On Call Nanny is Self Employed

You Are an Independent Contractor

In Canada, an On Call Nanny is actually a self -employed, independent contractor. You are not an employee and your requirements for tax reporting are more complex than the requirements for someone who is an employee.

You must keep books and records to prepare yourself for tax time. Mistakes can cost you money. There are many things you can deduct from your taxes when you are in business. Not knowing or understanding this can mean you pay for more taxes than you need to.

No one likes paying more taxes than the law requires.

Tax Tips for Nannies in Canada
Tax Tips for Nannies in Canada

On Call Nanny Tax Tips for Year End

How to Get Organized to File your Tax Return

1. Locate the necessary forms and papers and store them together in a file folder or envelope. Your folder should include:

  1. T slips - By the end of February, you should have received your T4 slips as well as any other T slips, including RRSPs and donation receipts.
  2. Include your income and expense records in your file or envelope. Self-employed contractors, which includes On-Call nannies are required to keep these records. .

Tracking Income and Expense Records

Best Done Throughout the Year

To simplify your life at tax season, it is wise to track your income and expense records throughout the year. This task is easier if you use bookkeeping software.

Tracking Gross Income

Keep track of the gross income your business earns. Gross income is your total revenue before you deduct the cost of goods sold and your business related expenses. Your income records should show the date, amount, and source of the income. Support all income totals with original documents. Original documents include sales invoices, cash register tapes, receipts, bank deposit slips, and client receipts

Tracking Business Expenses

Keep track of your expense receipts or other vouchers when you buy something for your business. When you buy merchandise or services, the receipts should show the date of the purchase, the name and address of the seller or supplier, the name and address of the buyer, and a full description of the goods or services.

In general you are able to deduct expenses that directly contributed to the earned income. This may include deductions to cover the cost of a home office. Deductible home office expenses include mortgage interest or a portion of your rent, a portion of your heat/gas/electricity, property taxes and insurances, eligible health care expenses and the costs of computers and other business equipment and more.

Recommended Bookkeeping Software for On Call Nannies

On Call Nannies, as well as other independent contractors, will find tax season a breeze if they have used a bookkeeping or accounting software package throughout the year to keep track of income and business expenses. Many contractors engage an accountant to set up the books initially. That way, you are certain is it done correctly and that you are tracking every expense possible. Once the software is set up, you can either enter the records yourself every month or negotiate with an accountant or bookkeeper to do this for you.

Did you know that when you are a contractor, your bookkeeping and accounting fees are deductible expenses? So is the cost of your software package.

The three software packages below are the most popular ones used in Canada.

  • Quickbooks
  • Quicken
  • Microsoft Office Excel

Tips For Working with an Accountant or Other Tax Professional

When an On-Call Nanny or other contractor uses the service of an accountant or other tax professional, you are entering into a professional relationship. You want to work with your accountant to be sure you get the best possible service and result.

Here are two tips:

  1. Make a list of questions throughout the year and take it to your accountant at tax time. Otherwise, you may forget to mention some issues when you visit your accountant. Forgetting to ask an important question could cost you money.
  2. Sort and organize your records as mentioned above. Provide your accountant with a neatly organized package. Avoid taking him or her a shoe box full of papers in need of sorting. Most accountants charge by the hour. You don't want to pay for sorting time when you could have done this yourself and saved the money.

© 2010 June Campbell

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    • profile image

      anonymous 6 years ago

      Good advice. I'll let my Canadian Nanny know!

      life services

    • junecampbell profile image

      June Campbell 6 years ago from North Vancouver, BC, Canada

      @anonymous: You are correct. I think very highly of Linh, who is my personal accountant.

    • profile image

      anonymous 6 years ago

      Yes! Always use a good accountant to help you. They do not cost you money, they save you money.

      Accountant Virginia Beach