# Care helper is employee?



## NorthernRaven (Aug 4, 2010)

Just a hypothetical here, for a situation where someone was to be hired to provide light help care for a senior in their own home. It would not be a live-in arrangement, might be up to 5-7 hours a day or 25-35 hours a week, and the arrangement might be for a few months. The person doing the hiring would be the senior's spouse, and would pay the caregiver directly (by cheque) as a private individual, not through an agency or any such. 

Is there any way in which this would *not* be considered an "employer-employee" situation that would require CPP and EI deductions?


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## ghostryder (Apr 5, 2009)

http://www.cra-arc.gc.ca/E/pub/tg/rc4110/README.html


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## NorthernRaven (Aug 4, 2010)

Yup, it certainly seemed like the case, but I just wanted to see if there were any real-world exceptions.

How would one go about cleaning up something like this after the fact? It would seem that EI/CPP would be due, both deductions from the employee and employer contribution. The latter would be easy, but for the former, if there are no further payments to the employee to recover the amount from, the employer would be responsible for covering this and have no way of recovering it? Assuming the employee reports the income the government would get the employee share twice in this case?

There would be something similar with income tax withholding, if the employee has already been paid and gone?


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## OptsyEagle (Nov 29, 2009)

All this is easy stuff. You simply get a business number from CRA and use the following calculator to determine withholding tax, CPP and EI both for the employee and employer.

https://apps.cra-arc.gc.ca/ebci/rhpd/startLanguage.do?lang=English

If this person has been working for you and you haven't been doing this then that is another story in which I cannot help. Perhaps CRA's website addresses this.


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## NorthernRaven (Aug 4, 2010)

It's the "oops, should have been doing this" scenario I'm now looking for info on. I'm not directly involved, but just trying to see what may be involved for a relative. There is time with the employee coming through an agency, being paid through a government program, and being hired directly, and I'm just trying to see what might be involved in that last case. Haven't found a handy "You should have been doing employer stuff, weren't, and here's the steps to take to fix it" resource, but I'll keep looking. 

I'm still trying to get details on the situation from the relative, so hopefully everything was under the other scenarios and none of this will apply.


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## finchm (Sep 29, 2010)

*Don't worry*

Even if this person has been working for you and you haven't been making deductions etc then its a case of getting this back in order by doing so now.

Take a read at this http://www.cra-arc.gc.ca/E/pub/tg/t4001/ depending on the time scale involved (same financial year) you might be able to go to the CRA explain the situation and probably have to end up paying your contributions + penalty which I believe is around 10% for failure to deduct + some interest. The CRA might even help you out by dropping some of the penalties but this is a big might!

In any event give the CRA a call and ask them about the hypothetical situation of what if this person was an employee and I have not done X,Y,Z what would I do? 

The CRA are sometimes here too help.


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## MoneyGal (Apr 24, 2009)

If the total amount paid was less than the minimum pensionable earnings for CPP ($3,500 in one calendar year), no CPP is due. 

As for EI...typically you have to have worked 600 insurable hours in the last 52 weeks or since your last claim. 

I *do* think it is possible that no CPP or EI is possible and no income tax withholdings are required - if the number of hours worked/amount paid is low. 

If you can tell us how much was paid for how many hours and over what period of time, I will be able to provide better info.


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## OptsyEagle (Nov 29, 2009)

MoneyGal said:


> If the total amount paid was less than the minimum pensionable earnings for CPP ($3,500 in one calendar year), no CPP is due.
> 
> As for EI...typically you have to have worked 600 insurable hours in the last 52 weeks or since your last claim.
> 
> ...


Moneygal, that info is useful for determining final amounts and EI eligility for claim. Not for withholding and remittance. On January 1 of a new year all employees and employers are still required to remit the appropriate amounts even though they may not owe any or be eligible for EI claims.


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## MoneyGal (Apr 24, 2009)

OE: I am thinking of babysitters in particular. I employ (using the colloquial sense of "employ" as opposed to the formal legal sense) a couple of "mother's helpers" to watch my kids after school from time to time. 

There's no way I pay as much as $3,500 to any of them over the course of a year (we are talking teenage girls here that I pay the occasional $20 to - like today). 

I do not relate to these girls as my employees and I certainly have not set up withholdings for them or make remittances on their behalf. 

I recall going over this particular issue when I was studying for the CFP but the precise details are lost in my brain, and I am not putting together an appropriate string for Google searches. 

My recollection is that unless a minimum number of HOURS are reached, and/or a minimum level of PAY is paid in a year, the person who is hired is NOT an employee and no remittances are due. 

It seemed to me that the OP's situation could be similar, depending on the number of hours worked etc. There's no way all the moms in Canada are establishing payroll accounts for the teenagers who pick up our kids at 3:30.


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## NorthernRaven (Aug 4, 2010)

The hours involved would definitely be above the various minimums, but I'm unclear as to how many of them might be considered as an employer relationship, since Veterans benefits pay for some, and it is possible the employee did some of the early time as an agency employee, not directly employed by my relative. I think the Veterans is done as a cash reimbursement, which is what made me start to worry when I heard about it (I'm normally across country from the relative's location). I don't want to intrude more than necessary, but I want to make sure they don't get into an awkward situation.

Until I can get more details I'm going to assume a worst case. Say 8 months at 40 hours per week, and $20/hour. I believe it is all in this calendar year, and the employment is no longer ongoing. I can see how this could be fixed if the employment _was_ ongoing. Set up as an employer, pay the employer contribution CPP and EI for the previous months, make the proper deductions to future cheques, and set up extra deductions from the employee to make up for the CPP, EI and income tax withholding that should have been done. But since in this case the employment has ended, there seems to be no way to retrieve the amount from the employee that should have been withheld. 

Ideally, the solution would seem to be to get an okay from the CRA to pay the owed employer shares of CPP/EI (might run to a couple of thousand) plus perhaps some penalties, and issue a T4 for the salary paid, showing CPP and EI deductions of zero. The government would get the CPP and EI (and income tax) from the employee when they file their return, and everyone should be happy. But I don't know if this is possible. If the government wants its CPP/EI and income tax withholding payments, I can't see a mechanism for how my relative would get them back. If the government position is that she is responsible for retrieving them from the former employee, that would seem to be difficult in many cases.

Normally I might stay out of things since this would probably fall through the cracks, but I would think in this case the salary could be deducted from my relative's taxes as "Attendant care" on line 330. If they want to do this, they'd have to make sure everything was shipshape.


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## SeanW (Jul 28, 2010)

NorthernRaven said:


> The hours involved would definitely be above the various minimums, but I'm unclear as to how many of them might be considered as an employer relationship, since Veterans benefits pay for some, and it is possible the employee did some of the early time as an agency employee, not directly employed by my relative. I think the Veterans is done as a cash reimbursement, which is what made me start to worry when I heard about it (I'm normally across country from the relative's location). I don't want to intrude more than necessary, but I want to make sure they don't get into an awkward situation.
> 
> Until I can get more details I'm going to assume a worst case. Say 8 months at 40 hours per week, and $20/hour. I believe it is all in this calendar year, and the employment is no longer ongoing. I can see how this could be fixed if the employment _was_ ongoing. Set up as an employer, pay the employer contribution CPP and EI for the previous months, make the proper deductions to future cheques, and set up extra deductions from the employee to make up for the CPP, EI and income tax withholding that should have been done. But since in this case the employment has ended, there seems to be no way to retrieve the amount from the employee that should have been withheld.
> 
> ...


Not a lawyer or an accountant, but I do some work in payroll so here's what I know about the situation.

The source of the funding doesn't matter. The veterans are paying to offset the costs, it doesn't get anyone off the hook for taxes.

The agency stuff will be as a contractor, so they would have withheld taxes, etc, your relative shouldn't have to worry about those deductions.

There are ways to reclaim CPP/EI undercontributions, but that relies on the employee working for you at the time:

http://www.cra-arc.gc.ca/tx/bsnss/tpcs/pyrll/clcltng/ei/vrpy-eng.html
http://smallpayroll.ca/blog/employment-insurance-calculations

I would suggest, as a first step, to try and get a hold of the worker to find out if they understand they were a contractor, and will be filing taxes as such. If so, they will file their return and pay the tax, CPP, and EI, and your relative can still deduct the payments.

Failing that, before your relative offers to pay the CRA, have them get the CRA to make a ruling on the status (http://www.cra-arc.gc.ca/E/pub/tg/rc4110/README.html). If it's somewhat ambiguous and both parties were under the understanding that it was a self-employed relationship, the CRA may bless that (I was involved in a case along these lines, we thought it was a cut and dried employer-employee relationship and the CRA ended up disagreeing)

If case #1 holds true (employee says they were self employed) and later decides that was wrong, they still go through the same "request a ruling" procedure. So in the end it's the same.

Failing that, yes, call the CRA and ask for help.

Sean


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