SLASH YOUR NANNY COSTS !! (I hope?)
We are getting a nanny; we will pay her such that her TAKE-HOME is $10/hr ($800 every two weeks), and we will pay all taxes, CPP, EI, and WSIB.
Here's my calculation of what my TOTAL OUTLAY is (I'll call this METHOD "A"):
[INDENT]1) I repeatedly plugged salaries into CRA's Payroll Deductions Calculator (http://www.cra-arc.gc.ca/eservices/tax/ ... oc-e.html), until I found that a salary of $983 gave a takehome of $800, and required a remittance to CRA of $250.
2) WSIB premium is $2.83/$100 of earnings (rategroup 944). (Incidentally, Based on the rate, a nanny taking care of your baby in your living room is more dangerous than working on mining machinery (2.68/100, group411) or working in a steel mill ($2.40, group352) . Thanks wsib! Ya Boneheads!). So wsib cost is $983 x .0283 = $27.84.
So TOTAL OUTLAY = (800 + 250 + 27.84) x 26weeks = $28,024 per year. Ouch.
If anyone can verify my methodology here, I'd appreciate it!!!
[/INDENT]
Now, how do we reduce Total Outlay, but nanny still has $10/hr take-home??? MY IDEA (I'll call this METHOD "B"):
[INDENT]Myself and my spouse each hire the nanny separately, for 20 hours per week each. Each of us separately remits the required amounts to CRA. Since wsib only applies to an employee you hire for more than 24hrs/week, the wsib premium disappears completely. Again, using CRA calculator, TOTAL OUTLAY per spouse = $11593.50
So TOTAL OUTLAY of the family is $23,187. Almost $5k savings!!!
However, come April of the following year, the nanny will owe $2653 in taxes (according to quicktax 06), which we'd have to give her as a (fully taxable) bonus. This'll push up our total outlay in that year to: $26,688. Which is $1336 savings.
[/INDENT]
So to summarize TOTAL YEARLY FAMILY OUTLAYS:
So... is Method "B" viable? Anyone tried it? Anyone know of CRA rules against it?
Here's my calculation of what my TOTAL OUTLAY is (I'll call this METHOD "A"):
[INDENT]1) I repeatedly plugged salaries into CRA's Payroll Deductions Calculator (http://www.cra-arc.gc.ca/eservices/tax/ ... oc-e.html), until I found that a salary of $983 gave a takehome of $800, and required a remittance to CRA of $250.
2) WSIB premium is $2.83/$100 of earnings (rategroup 944). (Incidentally, Based on the rate, a nanny taking care of your baby in your living room is more dangerous than working on mining machinery (2.68/100, group411) or working in a steel mill ($2.40, group352) . Thanks wsib! Ya Boneheads!). So wsib cost is $983 x .0283 = $27.84.
So TOTAL OUTLAY = (800 + 250 + 27.84) x 26weeks = $28,024 per year. Ouch.
If anyone can verify my methodology here, I'd appreciate it!!!
[/INDENT]
Now, how do we reduce Total Outlay, but nanny still has $10/hr take-home??? MY IDEA (I'll call this METHOD "B"):
[INDENT]Myself and my spouse each hire the nanny separately, for 20 hours per week each. Each of us separately remits the required amounts to CRA. Since wsib only applies to an employee you hire for more than 24hrs/week, the wsib premium disappears completely. Again, using CRA calculator, TOTAL OUTLAY per spouse = $11593.50
So TOTAL OUTLAY of the family is $23,187. Almost $5k savings!!!
However, come April of the following year, the nanny will owe $2653 in taxes (according to quicktax 06), which we'd have to give her as a (fully taxable) bonus. This'll push up our total outlay in that year to: $26,688. Which is $1336 savings.
[/INDENT]
So to summarize TOTAL YEARLY FAMILY OUTLAYS:
Code: Select all
METHOD"A" METHOD"B" Savings using "B" instead of "A"
Year 1 $28,024 $23,187 $4837
Year 2 $28,024 $26,688 $1336
Subsequent years will be similar to Year2