The Canada Emergency Response Benefit and your Nanny

In this situation – what do you do when facing temporary lay off of your nanny or caregiver?

Record of Employment (ROE)

A Record of Employment is required to be submitted to Service Canada by the employer when there is an interruption in earnings of the employee:

https://www.canada.ca/en/revenue-agency/services/tax/businesses/topics/payroll/payroll-overview/life-events-employees/what-should-you-employee-interruption-earnings.html

As such, if you have, or plan to, temporarily lay off your Nanny, this document should be produced.  It allows the employee to apply for Employment Insurance (EI) benefits.  Even if the employee will be using the Canada Emergency Response Benefit (CERB), it could be that the EI benefit is more advantageous, or that they will need to switch over to EI once the CERB ends.

CERB applicants need to keep in mind that if they are still working, there are restrictions on how much they can earn while taking the benefit.  Do not take acceptance of the benefit application as a sign that the recipient is really entitled to receive payment.  It could be determined later on that the benefit should not have been paid, and the recipient will need to return the money to the Canada Revenue Agency.  Be warned!!

Is CERB taxable?

A concern people should have is that the CERB is not taxed at source.  This means that they should set aside a portion of the benefit (how much will depend on the person’s total annual income in the calendar year).  Otherwise, they may be taken by surprise during next year’s tax time when tax is owed on the benefit that was received.  Some employers don’t wish to meddle in their employee’s financial affairs, but perhaps as a matter of general discussion, it can be pointed out that anyone receiving the CERB should set money aside for tax purposes.

What happens next?

We all hope that Covid-19 will be eradicated so that we can have our lives return to normal.  Our kids can return to school, we can go to the grocery store without fear, visit friends and family without concern of causing harm, return to the workforce, and bring our employees back to work.  Whoever would have thought that we would miss carpool/bus scheduling and running to activities!  Or, perhaps we are realizing that the rushing around should not have been the priority after all.

Without a doubt, this period in history has changed our world psyche – hopefully for the better.

Written by,
NannyTax is the longest running company in Canada that provides payroll services specifically designed for people who employ a nanny or caregiver for their loved ones.  We offer flexible service levels that meet your needs.  Ease the frustration of managing your nanny or caregiver payroll with our end to end solutions that cover full-time, part-time, or short-term employment.  We navigate pay stubs, calculate statutory holiday pay, track vacation accrual and complete the year end, and end of employment filings.  As a personalized service, we are always available to answer your questions – please give us a call.

Contact us at 1-877-626-6982, or visit us at www.nannytax.ca

 

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