Hiring a caregiver, nanny, housekeeper or other domestic worker can make a family an employer. Paying from a personal bank account, using cash or calling the worker an “independent contractor” does not remove payroll and employment-law obligations when the facts establish an employment relationship.
High-net-worth families often have additional complexity: multiple residences, travel, live-in arrangements, benefits, family offices, trusts or corporations paying household costs, and caregivers who accompany the family across borders. The legal employer, place of employment, immigration status and source of each payment should be established before work begins.
2026 Ontario planning note: The general minimum wage is $17.60 per hour through September 30, 2026 and increases to $17.95 on October 1, 2026. A contract may require a higher rate. Minimum standards cannot be waived by calling a wage “all inclusive.”
Step 1: determine whether the worker is an employee
The CRA requires the complete working relationship to be examined. Relevant factors include:
- who sets the schedule, duties, location and manner of work;
- whether the worker must personally perform the services;
- who provides tools, supplies and equipment;
- whether the worker can hire assistants or subcontract;
- the worker’s financial investment and risk of loss;
- the worker’s opportunity to increase profit through business decisions;
- whether services are offered to multiple clients; and
- the written agreement and whether it matches the actual conduct.
A worker who attends the family’s home on a set schedule, follows household directions, uses household supplies, works personally and bears little financial risk will often have indicators of employment. An invoice or business registration is not conclusive.
The CRA’s Employee or Self-employed guide explains the test. If the status is uncertain, the payer or worker may request a formal CPP/EI ruling within the applicable deadline.
Step 2: identify the legal employer
Do not assume that the person who transfers the money is automatically the only employer. Review who hired the worker, controls the duties, benefits from the services, has termination authority and bears the employment cost.
Potential structures include:
- an individual member of the household;
- two spouses or partners jointly;
- two families in a nanny-share arrangement;
- a family office or management company; or
- a third-party home-care or staffing agency.
Using a corporation to pay personal household costs can create shareholder-benefit and deductibility issues. It does not convert personal domestic services into a corporate business expense. Intercompany or trust reimbursement arrangements should have a clear legal and tax basis.
Step 3: set up CRA payroll correctly
If the caregiver, babysitter or domestic worker is an employee, the CRA requires the employer to withhold:
- income tax;
- Canada Pension Plan contributions; and
- Employment Insurance premiums.
The employer must also fund its own CPP contribution and EI premium, remit the combined amounts by the assigned due date, and report the remuneration on a T4 slip. The CRA’s current caregiver and domestic-worker payroll guidance confirms these requirements.
Employer payroll checklist
- Obtain or confirm a business number and payroll program account.
- Have the employee complete federal and Ontario TD1 personal tax credit forms.
- Document the employment agreement, start date, pay period and regular payday.
- Calculate gross pay, taxable benefits, CPP, EI and income tax for every pay period.
- Provide a wage statement showing earnings and deductions.
- Hold source deductions in trust and remit them with the employer portions by the CRA deadline.
- Reconcile payroll records to bank payments and the CRA payroll account.
- Prepare and file T4 slips and the T4 Summary by the last day of February following the calendar year.
- Issue a Record of Employment when an interruption of earnings occurs.
- Retain payroll, contract, time and payment records for the required period.
Regular monthly remitters generally remit by the 15th day of the following month; eligible quarterly remitters use April 15, July 15, October 15 and January 15. The CRA assigns the remitter type. Confirm the employer’s actual frequency through the payroll account rather than assuming quarterly status. See CRA payroll remittance due dates.
What must be reported on the T4?
The CRA requires amounts paid to an employee caregiver or domestic worker to be reported on a T4, including:
- Box 14 — employment income;
- Box 24 — EI insurable earnings;
- Box 26 — CPP pensionable earnings; and
- applicable taxable-benefit codes, such as code 40.
Board, lodging, transportation, vehicle use, gifts, allowances and other benefits require separate analysis. A reimbursement supported by receipts and incurred for the employer’s business may differ from a flat personal allowance.
Employees must receive their T4 by the last day of February following the calendar year. The CRA’s T4 filing guide sets out the filing and distribution rules.
Ontario employment standards apply at home
Domestic workers are generally protected by Ontario’s Employment Standards Act whether they work full-time or part-time. The standards can include:
- minimum wage;
- regular pay periods and wage statements;
- hours-of-work and eating-period rules;
- overtime where applicable;
- public holiday entitlements;
- vacation time and vacation pay;
- protected leaves;
- termination notice or pay; and
- record keeping.
Ontario’s domestic-worker guidance distinguishes an occasional, short-term babysitter from a domestic worker for this category, but the full relationship and other legal rules still require review.
Minimum wage and vacation pay
Ontario’s general minimum wage is $17.60 per hour from October 1, 2025 through September 30, 2026 and increases to $17.95 on October 1, 2026. The student rate can apply only where all conditions are satisfied. See Ontario’s current minimum-wage table.
Vacation pay is generally at least 4% of gross wages for an employee with less than five years of employment and at least 6% after five years, subject to the statutory rules and any better contractual entitlement. Vacation time and vacation pay are related but distinct obligations.
WSIB coverage for Ontario domestic workers
The WSIB states that domestic workers directly hired and paid by a private household are covered when they work more than 24 hours a week for one employer. If hours fluctuate above and below 24 but exceed 24 in most weeks, coverage continues. Employers of full-time domestic workers must register.
Where a domestic worker works 24 hours or less per week for a single employer, mandatory coverage generally does not apply under that policy, although optional insurance may be available. Special rules apply to shared employment and personal-care attendants.
Coverage analysis should be completed immediately after hiring. Where registration is required, the WSIB indicates a 10-calendar-day registration window.
Written employment agreement: provisions to address
A clear agreement helps both the family and worker understand expectations, but it cannot contract out of minimum legal standards. Consider including:
- identity of the legal employer and employee;
- start date, work location and primary duties;
- regular schedule, on-call expectations and travel;
- hourly wage or salary and overtime treatment;
- pay period, payday and method of payment;
- vacation, public holidays, sick time and leaves;
- board, lodging, transportation and taxable benefits;
- expense reimbursement and household purchases;
- confidentiality, privacy and handling of family information;
- use of vehicles, insurance and driver’s licence requirements;
- health and safety expectations;
- termination provisions compliant with current law; and
- process for schedule changes and performance concerns.
For live-in or travelling employees, obtain employment-law and immigration advice where required. Work performed outside Ontario or Canada may create another jurisdiction’s payroll, labour, immigration, social-security or tax obligations.
Record of Employment when work stops
An ROE is generally required when an employee has an interruption of earnings, including many terminations, layoffs and leaves. For common electronic weekly, biweekly or semi-monthly payrolls, the deadline is generally five calendar days after the end of the pay period in which the interruption occurs. Monthly and four-week payrolls use a modified earlier-of test.
Review Service Canada’s ROE completion guide for the correct deadline and reason code.
Common household-employer mistakes
- treating the worker as self-employed solely because the worker requested it;
- paying a net amount without calculating gross wages and deductions;
- missing employer CPP and EI costs when budgeting;
- including vacation pay in the wage without a compliant agreement and wage statement;
- ignoring overtime, public holiday or termination obligations;
- failing to value taxable board, lodging or other benefits;
- using a corporation to deduct personal household expenses;
- missing WSIB registration for a worker over the hour threshold;
- not issuing a T4 or ROE; and
- keeping only e-transfers without time, wage and deduction records.
Frequently asked questions
Is a part-time nanny automatically self-employed?
No. Hours alone do not determine status. The complete relationship—especially control, personal service, tools, financial risk and opportunity for profit—must be reviewed.
Can I pay a caregiver in cash?
Cash payment does not remove payroll obligations. Gross wages, deductions, employer contributions, wage statements, remittances and T4 reporting still apply where the worker is an employee.
Can my corporation employ the family caregiver?
Possibly as a legal arrangement, but personal household services are generally not deductible business expenses and corporate payment can create shareholder-benefit issues. The employer and reimbursement structure should be reviewed before payments begin.
Do I need WSIB if the caregiver works 20 hours per week?
Under the cited domestic-worker policy, mandatory coverage generally applies above 24 hours per week for one employer. Optional coverage and special rules may apply, particularly for attendants or shared employment.
What if payroll was not set up for prior years?
Do not create slips or remittances without reconciling gross wages, dates, benefits and worker status. Late payroll returns, source deductions, employer contributions, interest and penalties may be involved. A structured correction should be prepared promptly.
How our CPAs can help
Perfect Accounting assists families and family offices with worker-status reviews, CRA payroll registration, recurring payroll, T4 and ROE reporting, prior-period reconstruction, taxable-benefit analysis and coordination with Ontario employment-law, immigration and WSIB specialists when required.
Book an introductory call before the worker’s first pay date or as soon as a past payroll issue is identified.
This article provides general information as of August 2026. It is not legal, immigration or tax advice. Employment, payroll and workplace-insurance obligations depend on the complete facts and current law.