What is Net vs. Gross?
As a household employer you are responsible for paying and withholding your nanny’s taxes.
Gross represents the whole part. No deductions have been made from the whole salary. For example, if your nanny makes $2000.00 gross per month, this would be the amount she makes prior to any deductions. The confusion arises when the family learns that $2000.00 is not the maximum they will be paying. Although you will be responsible for withholding the nanny’s taxes (CPP, EI and Tax), you as the employer are also required to remit the CPP, and EI, a portion of the nanny’s taxes making your grand total over $2000.00. Net refers to the amount left over after all deductions are made.. If she makes $2,000.00 gross per month, after taxes, her net paywould be about $1600.00 per month. This is the amount that you pay her each month.
The tax that you withhold from the nanny’s salary along with the employer’s portion are due to the government on a monthly basis.
Linh Tsiu – Nanny Payroll Accountant, Nannies on Call