A Taxing Situation in Canada: Part II

Hello Readers, Northern Nanny here again. I recently posted regarding "A Taxing Situation in Canada".   Due to all of your fantastic comments and advice, I have looked deeper into my situation and have made the decision to approach my employers regarding the situation. In doing so I have acknowledged that: a.) my employer might not agree to pay me $15.00 NET per hour, or b.) might wish to discontinue my services as a result. However, I feel that I am grossly underpaid and need for my payment to be adjusted accordingly.

You have helped me thus far, readers, do you feel that it is unreasonable to ask for $52K per year (which is $40K net per year) as a live-out nanny at 51hrs per working week (Monday-Friday)? I know from reading the annual salary reviews that a lot of us get that much, I suppose when I put it on paper I feel I am asking for a lot? No? To put it in perspective:  in 2009 I was making $675.00 per week NET @ 51hrs or $13.23/hr paid less than $1000.00 in taxes due to our "arrangement".  In 2010 I was making $708.75 per week NET @ 51hrs or $13.89/hr. I did claim about $20,000 and paid out around $2,000. In 2011, I was making $708.75 per week NET @ 47hrs or $15.79/hr. My boss mentioned that I should be paying full-amount taxes but I had already put in my claim and thus couldn't change the amount. I paid out $3,164.00 and claimed $22,000 income.

Now going forward to 2012, my boss has stated that I need to be paying REAL FULL TAXES for APRIL 2013 and thus with my annual 5% raise as well as additional (4) hours of work for the contract-year I would be making $807.33 per week GROSS, or $15.83 per hour GROSS. This new rate works out to $12.46 per hour NET OR $635.46 NET per week OR $1270.92 NET bi-weekly OR $2541.84 NET per month My issues are: - I want to make $15.00 per hour NET - I want my employer to consider me a domestic worker employee rather than a self-employed individual [In my province a NANNY is NOT self-employed] - I want my employer to remit my taxes, rather than have me remit them at the end of the year and pay a lump sum. - I want my employer to provide me with an annual T4 and pay stubs upon request.

If my employer can meet these conditions outlined I would be making: $15.00 per hour NET OR $758.00 NET per week OR $1516.00 NET bi-weekly OR $3032.00 NET per Month. Is this too much to ask? I have created a very detailed contract renewal to reflect what my needs are and also to reflect other issues I have in my current position: (parent not providing petty cash on time, parent not supplying the household with required provisions etc, parent not providing gas stipend as per our prior contract in a timely manner and not on a regular basis) Readers: Can you please advise if I have left anything out of my contract that you feel should be included and also, do you think that what I am asking is out of line or may get declined? I need HELP!


MaryPoppin'Pills said...

Did you want me to provide a link to your Contract? Because of its length, I am unable to Publish it with your Submission.

good4u!! said...

Too many numbers for this febile mind. ;-) $15 an hour is certainly reasonable. Id pay you $20 an hour, if u were my nanny. I'm in California (but we travel bc were gypsy). I'm so proud of u for standing up ffor yourself.

Lyn said...

52 grand doesn't seem unreasonable to me. However that means having to ask for a raise of $100 a week. That's a sizable increase.

MissMannah said...

You've also confused me beyond belief with all that math involved! I think you are focusing too much on net income, when you should be focusing on gross. I understand that you need your take-home pay to be a certain amount in order to live comfortably, but you don't need to say all that when approaching your employers. It should just be understood. If you want your employers to deduct your taxes from your paycheck, tell them that. Also, if they are the ones doing it, they can be sure you are paying the right amount. Plus, if Canada is like the US, you'll be getting much of your federal taxes back come tax time anyway because it sounds like you'll be over-paying. So anyway, tell them you want to make X amount hourly gross (not net) and you want them to deduct the correct amount and pay your taxes monthly/quarterly (however you do it).

N is for Nanny said...

It's always nice to hear an update OP, thanks! I've been reluctant to reply, because I think it's hard to know what appropriate compensation is without knowing where someone lives - Canada is a big country and, like the US, there are huge differences in cost of living. I appreciate your continued respect for the family's privacy by not divulging your exact location. Where I live, $52K/yr is a pretty common salary. However, there are plenty of places in the US where I could buy a house for less than the cost of a parking space in my work neighborhood. It's all relative.

As far as employment status - i.e., self-employed or a household employee - I think that that has to be non-negotiable, particularly if they want to go fully legal on taxes. If I had to pick one thing in your posts to fight for, that would be it. I would also seek petty cash, the household being stocked, and previously-agreed-upon gas stipend for driving done on the job. I would suggest to them that you'd be willing to work within a weekly/monthly budget and ask if he'd rather provide the cash upfront, a credit card for work usage, or (if you are comfortable with this) receipts for reimbursement, to be paid weekly on Fridays.

As far as your salary increase goes...Honestly, that sounds like a huge salary increase to me, and if I were a parent and had employed a great nanny at a lower rate for years, I would probably look for another nanny at a lower rate. Family income/assets have very little to do with employee pay. Much like I don't expect to lower my rate for families of more meager means, I also don't raise my rate for wealthier families. My rate is my rate and it changes based on employer expectations (e.g., number of kids, support tasks, schedule) and nothing else. I agree with PP that it's a bit hard to understand exactly what you are looking for and why. "I need to make $x/hr!" is not a compelling argument and I don't think an employee's personal expenses or income goals have any place in a compensation negotiation. I would instead do research about what similar positions are being compensated at and present THAT data - e.g., "I surveyed similar positions listed on nanny sites x, y, and z and found the average compensation to be $a-$d/hr. Based on my time of service and special background, I think $c/hr would be appropriate for our situation." Call a couple local nanny agencies "as a prospective parent with a couple of questions" and describe your position and "ideal candidate" - then ask what they would ballpark appropriate compensation to be for your position - and also how long they think it would take them to fill your position. This will also give you an idea of potential competition if your negotiation doesn't go well. You do a lot for the family and they may also prefer to reduce your duties or assign certain tasks to be completed while your charge is in school. It's your decision if you find that acceptable or not.

I think you have to look at things from the perspective of your gross salary - i.e., your employers' cost of employing you. I know your concern is your net, as it is with most of us, but your net was artificially inflated because you (and your employers) were cheating on your taxes. I apologize if that sounds harsh, as that is not my intention, but you were not honestly making $x NET - your salary was $y GROSS. Always negotiate in gross terms, if for no other reason than if your situation changes (e.g. you get married) or the government changes withholding percentages (as in the US).

Good luck! I hope it goes well and you end up with a solution you're happy with. Please update us again!

PS You are also going to need to address tax expectations for the first half of the year.

Northern Nanny said...

OP Here!
Thanks you everyone for your fantastic posts thus far!

I am going to bed now but will update you all tomorrow!

Ps. Regarding what city I live-in, I will say it is one of the following:

Calagary, Toronto, Vancouver- all major metro areas, and I work for someone who is doing "very well" financially.

christine said...

I work as an assistant for a small business in the USA. I am responsible for all bookkeeping so I know how much it costs an employer to pay a worker on the books. In my situation, I work part time, about 50-55 hours every two weeks. The other employee, a housekeeper, works about 16 hours every two weeks. I make $17 an hour and she makes $16 an hour. Payroll, including all taxes paid by my employer and the charge by the payroll company (which is minimal, at $65 for each payroll) is about $1,400 every two weeks. Besides entering the payroll in our accounting program, the payroll company does all the actual work, including all reporting to the IRS and state tax department.

So, it really isn't such a huge cost for them to do this right way. And, when you hire a payroll company, they do all of the work.

gypsy said...

What does your employers income have to do with the price of tea in China? Its irrelevant.

Thanks for the update!! Let us know what u tell them & how it goes. Please make it much more simple than what you posted here. That was waaay complicated.

I agree with the,"I've researched wages in this area.....average is.....I think $x is apropriate in our situation. Additioanlly, Id like to be considered an employee, not self employed(or vise versa, not sure what u wanted).

Best of luck to u!! ;-)

Northern Nanny said...

Hello All!

Thank you very much for your posts, and insight into the situation. I know that my post has been confusing given the numbers etc.

I will be sure to post an update when I submit the proposal, so keep posted at the end of August, beginning of September.