Tax, super & insurance

When you employ a nanny there are obligations for the employment.

You must comply with the legal obligations of being an employer. This is unless the nanny uses their ABN at which they are self employed.

In Australia the legal obligations for the minimum wage is currently $772.60 per week based on a 38 hour working week. Or alternatively it is $20.33 an hour (for over 20 year old).

For casual employees the minimum wage is generally 23% higher per hour.

Meanwhile if you employ a nanny the obligation to pay the minimum wage applies in spite of any benefits (use of car, phone, etc) that may be offered as part of the employment unless agreed as part of a salary sacrifice.

It is important to also be clear on your employees entitlements.

A full time employee is entitled to a minimum of 20 days annual leave or pro-rata for the hours/days worked. and part time employees receive the same entitlement on a pro-rata basis. Sick leave is 8 days in the first year for a full time employee or on a pro-rata basis.

You are required by law to register with the ATO (Australian Tax Office). This will also allow for income tax deductions. If you find that that side of things is not what you are interested in doing yourself then there are companies that specialise in doing your nanny’s payroll.

There are a range of companies but here are two to help you on your search (they are not recommendations just a starting point): www.easypayroll.com.au or www.epayroll.com.au. Alternatively there are programmes you can purchase and/or freely download that can also help.

A nanny can apply to be registered in Australia by completing a form and meeting eligibility criterion such as being over 18 years, have a recognized qualification, have a tax file number, meet licensing and regulation requirements for that state/territory and complete and submit the Registered Child Care Provider Application form.

You will need to negotiate a workplace agreement/nanny contract that will include such details as how often you provide pay (fortnightly, weekly) and how it is to be paid.

Under pay as you go (PAYE withholding), as the employer you may be required to withhold amounts from payments. These amounts are sent to the Tax Office.

For further information contact the Tax Office on 132 866 or www.ato.gov.au

Paying nannies cash in hand (or under the table) is not only illegal it is unfair to the nanny in cases of trying to apply for credit to purchase a car or house as they have no means of substantiating their income.

Superannuation should be paid for any employee over 18 yrs. If they are paid $450 or more in a calendar month, then they should be having superannuation guarantee contributions made to their choice of complying fund.

Nannies as with any other profession are entitled to 9.25% (in Australia) of their wage. Superannuation is paid to the fund of their choice quarterly. If as a Nanny  works less than 30 hours per week then as the employer you are not legally required to pay superannuation.

If as a Nanny they are employed as a contractor then the tax and superannuation is their responsibility. There are some Nanny agencies that employ the nanny on the employers behalf and take care of all the tax, superannuation and insurance.

If you require further information please contact the ATO on www.ato.gov.au/super or 13 10 20

Do you need insurance? Actually you are required by law to provide Workers Compensation for an employee who is employed in your home.

As the employer you should have liability insurance but it may not be enough and may not cover properly.

Work Cover is the next best place to look for understanding regulations and obligations and the best cover required. Each state has differing regulations regarding Work Cover so we have listed the numbers and links below.

For example: WorkCover Queensland offers insurance called “A Workplace Personal Injury” Insurance policy. The policy is available only to individuals who are deemed to be an “eligible person.” Their insurance is an optional one. It covers you in financial terms to those not covered for workers compensation and a nanny generally falls into that category. The premiums vary as it is based upon your total income.

Insurance can vary but can be as little as $20-60/ year. Just make sure you research with Work Cover in your state so that you are suitably covered should an accident occur.

If your nanny is going to be using your car then you need to add them to your comprehensive cover.

If your nanny is to be using their own car it is something worth discussing that they have comprehensive cover should your child be transported in their car.

You may wish to look at obtaining specific nanny insurance which is a form of Public Liability Insurance. This is not essential and is not required by law but after you have done research you may find it is something you wish to do (or not).

Not many companies offer specific nanny insurance but we know of two which can be a starting point for you to establish if it is something you wish to include (or request your nanny have) when employing a nanny.