When you employ a nanny from a specialist nanny recruitment service, often you are given the option to pay the nanny’s wages through the same agency.
Is this the best thing to do?
Choosing to pay your nanny through the nanny recruitment agency which helped you to find them comes down to personal choice. … BUT … there are a couple of reasons why it makes sense to choose a separate nanny payroll service, that is, not ‘in-house’.
To make the right decision for you, consider the pros and cons.
The impact of GST
One thing to consider is that when you pay the nanny through the recruitment service, you will also pay Goods and Services Tax (GST). When you choose a payroll service that’s not in-house, such as CarePayCo, then you don’t have the GST fees.
This is perfectly legitimate, it comes down to one of the many complexities of Australian tax law.
A nanny service with in-house payroll will charge GST because they are providing a service.
On the other hand, under the CarePayCo model, the family directly employs the nanny, and CarePayCo simply facilitates that process. GST does not apply, because it is not applicable on wages or salaries.
And the fact is, with GST at 10%, you could save thousands of dollars a year, especially if you employ a nanny on a full-time basis.
The other important consideration is that when you choose to use a dedicated nanny payroll-only service, you can, over time, add all your domestic help to the same service.
Pay all your domestic employees with one service
So, if you have a cleaner and a gardener or someone who provides personal care, then all these can be added to your domestic payroll service too, which makes life simpler for you because all your expenses are under any other home help, then it all goes through the one payroll service which just makes your life simpler.
And, when you choose CarePayCo, you’re accessing specialist knowledge and experience. Beyond paying the domestic service staff, you can access tax, salary, and wages advice, help with employment contracts, holiday, sick leave, and other entitlements, information, and resources in relation to employment law, insurance, and superannuation.
For many years in Australia, families have typically had informal cash-in-hand arrangements with nannies and other domestic helpers like carers, but given the growing popularity of nannies, and the steadily expanding home-help market overall, in recent years the ATO and Fair Work Australia have been committed to making sure people understand their obligations when they employ home help or contract a home service, as well as the important differences between the two.
Doing the wrong thing can be costly and “I didn’t know” is not always an appropriate, or effective, legal defence, so it makes sense to get professional advice.
If you have any questions or would like more information about our service, contact us.
