Nanny Payroll in Canada

Hiring a nanny or household employee in Canada makes you an employer in the eyes of the CRA, with the same withholding and reporting obligations as any business. Many families do not realize this until tax season. This guide covers what you must deduct, remit and report for 2026. To estimate the true cost of a nanny’s wages including employer contributions, use our payroll calculator with the employer view.

You Are an Employer Under CRA Rules

If you hire a nanny, housekeeper or caregiver who works in your home on your schedule, the CRA generally considers them your employee, not a contractor. That means you must open a payroll account with the CRA (an RP account), withhold income tax, CPP and EI from their pay, pay the employer’s share of CPP and EI, and remit everything on schedule. Calling someone a contractor does not make it so if the working relationship looks like employment.

What to Deduct From a Nanny’s Pay

Apply the same 2026 payroll deductions as any employer: federal and provincial income tax based on the nanny’s TD1 claims and province of work, CPP contributions up to the 2026 maximum, and EI premiums up to the 2026 maximum insurable earnings. Household employees are insurable for EI in most cases. Our payroll deductions calculator handles the exact figures by province.

Employer Costs on Top of Wages

Beyond the nanny’s gross wages, budget for the employer’s share: CPP at the 2026 employer rate on pensionable earnings, EI at 1.4 times the employee premium, plus any provincial levies such as Ontario’s Employer Health Tax or Quebec’s health services fund if applicable. A common rule of thumb is to add 10 to 15 percent on top of gross wages for total employer cost.

Contracts and Record-Keeping

Put the arrangement in writing: duties, hours, hourly rate or salary, overtime terms, paid vacation and statutory holiday entitlements, and notice periods. Keep payroll records for six years, including pay stubs, TD1 forms and remittance confirmations. If the nanny lives in your home, separate rules can apply to room and board valuation, so document any non-cash compensation.

T4 Slips for Household Employees

You must issue a T4 slip to your nanny by the last day of February following the tax year, exactly like any employer. Report employment income, CPP contributions, EI premiums and income tax deducted in the usual boxes. Our T4 slip guide explains each box if this is your first time filing.

Common Mistakes Families Make

The biggest errors: paying cash with no records, skipping the payroll account and remittances entirely, misclassifying the nanny as self-employed, and forgetting T4s. The CRA can assess the unremitted amounts plus penalties and interest years later. Setting up proper payroll from the first paycheque is far cheaper than fixing it after a review.

Monthly Cost Breakdown: A Worked Example

Hiring a nanny at $20 per hour for 40 hours a week means monthly wages of about $3,467. Employer costs sit on top of that. Approximate figures for 2026:

Item	Monthly Amount (approx.)
Gross wages	$3,467
Employer CPP contribution	$189
Employer EI premium	$80
Total employer cost	$3,736

Income tax withholding also comes off the nanny’s pay, but that is the employee’s money held temporarily, not an employer cost. The real employer premium over wages is roughly 7 to 8 percent once CPP and EI are included. Budget for the full $3,736, not just the wage, or the first remittance quarter brings an unpleasant surprise. Our payroll calculator can model the deduction side of these numbers.

Registering for a CRA Payroll Account, Step by Step

You need a payroll program account (an RP account) before your nanny’s first payday. First, make sure you have a business number; if you do not have one, the CRA issues it during the same process. Second, register for the payroll program through CRA Business Registration Online or by phone. Third, wait for the confirmation letter with your RP account number, which usually takes one to two weeks. Fourth, set up your remittance schedule. Most household employers remit quarterly because their total monthly withholding is small.

Start this process the moment you decide to hire, not the week the nanny starts. Payroll without an account number means scrambling, and late first remittances draw penalties from day one.

Nanny Shares: When Two Families Split One Nanny

In a nanny share, two families employ one caregiver and split the hours and cost. Each family is a separate employer with its own payroll account, its own remittances, and its own T4 at year-end. The nanny receives two T4 slips. This surprises families who assume one family can run payroll for both, but the CRA treats each paying household as an employer.

Put the arrangement in writing: the schedule, the hourly rate, how sick days and holidays are split, and what happens when one family goes on vacation. The payroll side is straightforward once both accounts exist; the relationship side is where shares succeed or fail.

Quebec Notes: QPIP and Provincial Rules

Quebec adds two wrinkles. First, the Quebec Parental Insurance Plan replaces EI for parental benefits, so Quebec household employers remit QPIP premiums instead of the EI parental portion, at different rates. Second, Quebec’s provincial tax withholding runs through Revenu Quebec rather than the CRA, which means dealing with two agencies instead of one. The federal obligations (CPP becomes QPP in Quebec) mirror the rest of Canada. If this sounds like a lot, it is, which is why Quebec families use payroll services for nannies more often than families elsewhere. Our Canadian payroll guide covers the dual-agency setup in more detail.

Frequently Asked Questions

Do I need to do payroll for a nanny in Canada?

Yes, in most cases. A nanny working in your home on your schedule is generally your employee under CRA rules, so you must withhold and remit income tax, CPP and EI, and issue a T4.

How do I open a payroll account for a nanny?

Register for a payroll (RP) account with the CRA online, by phone or by mail. You will need your Social Insurance Number as an individual employer.

Does a nanny pay EI in Canada?

Yes. Household employees are generally insurable for Employment Insurance, so both employee premiums and the employer’s 1.4x share apply.

How much does it cost to employ a nanny in Canada?

Beyond the hourly wage, budget roughly 7 to 8 percent extra for employer CPP and EI contributions. A nanny earning $3,467 per month costs the employer about $3,736 all in, before income tax withholding that comes off the nanny’s pay.

Do both families in a nanny share need payroll accounts?

Yes. Each family is a separate employer with its own CRA payroll account, its own remittances, and its own T4 for the nanny at year-end.