Compensating Your Au Pair in Canada:
THERE IS NO SUCH THING AS POCKET MONEY!
We’ve been hearing too frequently lately from “experienced” host families who have never issued a pay stub or remitted to Revenue Canada… not to mention the families who still think that compensating their beloved Au Pair with “pocket money” is fair and reasonable. Say what????? Families and Au Pairs have reached out to us after realizing that they need our help figuring things out. In short, Host Families are employers as far as the government is concerned and thus have a responsibility to report their Au Pair’s income and pay according to provincial guidelines.
10 Tips Regarding Paying Your Au Pair
- You MUST compensate your Au Pair with at least the minimum provincial hourly wage.
- You MUST provide your Au Pair with a paystub every pay period that shows all compensation and deductions to date (including CPP, EI and any agreed upon Room and Board) as well as hours worked, rate of pay and any vacation/overtime.
- If room and board is deducted (which is legal if your Au Pair has an IEC Working Holiday Visa but not if your Au Pair has a temporary foreign worker Caregiver Visa) it MUST be stated in the Au Pair/Host Family contract and must not be more than the provincial maximum for live-in care.
- If you do not deduct room and board, you MUST account for this when calculating payroll as room and board is considered by CRA to be a “taxable benefit” for your Au Pair. Taxable benefits must be reported to CRA (transit passes and cell phones are another example of taxable benefits).
- Your Au Pair MUST have a social insurance number (this will be required in order to issue her T4 in February) and you will need the Au Pair’s SIN when inputting your own childcare claim on your annual tax return.
- You MUST make regular remittances to CRA. Remittances include employee/employer contributions toward CPP and EI as well as any income tax deducted.
- Pay your Au Pair via e-transfer – never cash. This way you have a record of payment.
- Consider using a payroll service. We are currently testing one out and will write a post about it once we decide what we think about it. For roughly $20 per month you don’t even need to think about calculating payroll!
- You MUST issue your Au Pair a Record of Employment when she finishes her contract… it’s the law! You will also have to complete a T4 before the end of February for the previous tax year. You may be penalized by Service Canada and CRA for not submitting appropriate paperwork on time.
- Ensure all agreed upon compensation is detailed in your Au Pair/Host Family contract. This includes your agreement on holiday pay (paid time off or 4% per pay period for example), hourly wages, bonuses, other incentives…
We can help!
Canadian Au Pair Solutions can help if you are lost or confused about any of the above. Our Memberships provide step by step guidance. Our Document Library helps you navigate the employer component of hosting an Au Pair. We provide you with such things as sample contracts, instructions on creating a T4 and ROE as well as how to set up your Business Account with CRA. The list of things we can do for you is endless and we are confident that we can answer any and all of your questions Au Pair-related. Contact us for more information on our Memberships and which option is right for you.
Canadian Au Pair Solutions