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My wife is going back to work and we are thinking about hiring a nanny. I understand the nanny would be an employee and I would be responsible for CPP, EI and tax remittances. Would we need to submit a business return? Could we submit other expenses for the nanny other than childcare amounts?
You don't need to file a business return if you employ a nanny. However, this means you cannot deduct expenses. You just need to file a T4 return to record your nanny's income and deductions with the Canada Revenue Agency. You can find more details here http://www.cra-arc.gc.ca/esrvc-srvce/rf/t4/menu-eng.html.
The only way you could deduct expenses (aside from the regular childcare deductions) is if your nanny is renting space in your home. Then you could use rental expenses to offset the rental income earned from renting space to your nanny.