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Dear Tax4Nanny… I would like to give a raise…

Dear Tax4Nanny… I would like to give a raise…

This letter was originally posted in the blog pinkandbluebaby.

Dear Tax4Nanny
My nanny has worked for me for a year and I would like to give her a raise? Can you let me know what would be an appropriate amount?
Thank you,
Gina R.

Dear Gina R
Giving a yearly raise is common practise for most employers of caregivers. I always suggest to clients that they need to pick an amount that they feel they can continue to offer yearly. For example, if you raised your nannies salary by $0.50/hour, you should be comfortable raising it at least $0.50/hour next year.

In terms of an amount, I usually suggest a 5-10% increase in gross salary for live in caregivers. Therefore if your caregiver was a live in caregiver earning $10.56/hour (current minimum wage), a 5% raise would increase her hourly wage to $11.09/hour and a 10% raise would increase her hourly wage to $11.62/hour.

In terms of an amount, I usually suggest a 3-5% increase in net salary for live out caregivers. Therefore if your caregiver was a live out caregiver earning $500/week, a 3% raise would increase her net salary to $515/week and a 5% raise would increase her net salary to $525/week.

An important thing to remember is that your remittances to CRA (Canada Revenue Agency) and premiums to WSIB (Workman’s Safety Insurance Board) will increase as a result of a raise that you give your caregiver. You should always calculate the total increase in your cost prior to telling your caregiver her raise to make sure you are comfortable with that increase.

Sincerely,
Gila Ossip, CA, MBA

Chartered Accountant Gila Ossip is a mother of two, with 10-plus years of financial experience. Gila founded Tax4Nanny as an affordable, turn-key solution for those who want relief from the headaches of government-related paperwork and tax filings for nannies and other caregivers.