The Australian Tax Office crackdown on contractors claiming to be business entities to gain a tax advantage has been extended to nannies and nanny agencies operating in cash or contractor roles.
Now more than ever it’s imperative to ensure you are paying your nanny correctly.
Source: A nanny state as taxman turns on mums
By Gemma Jones and Lisa Power The Daily Telegraph August 08, 2012
PARENTS who hire nannies face being hit with bills for back pay, sick leave and superannuation as the industry becomes professional, turning private homes into workplaces.
Increased vigilance by the Australian Tax Office to identify cash payments made by families to carers without other entitlements has led to some agencies raising fees by up to 25 per cent to take on tax and other responsibilities. Agencies are now covering payroll tax, professional indemnity, workers compensation and public liability.
Childcare agencies say the changes mean workers are paid professional rates and remove grey areas about liabilities and compensation, but some fear the price increases could see families turn to unqualified “backyard care” instead.
The Australian Nanny Association, which is campaigning for better industry regulation, said the new requirements were confusing for many families.
“Parents aren’t aware there are risks involved if they are not looking at doing it legitimately,” ANA spokeswoman Annemarie Sansom said.
“Even if (the nanny has) their own ABN and are self employed, if they are doing a certain number of hours a week, the ATO could still class them as a permanent employee of the family and the family would have to back pay them things like super, annual leave, sick leave and all those things.
“It is pretty full on.”
The ATO confirmed it had put nanny agencies and other businesses using cash payments under greater scrutiny.
Up to 30,000 nannies are thought to be minding children in Australian homes.
WorkCover NSW said rules on homes being classed as workplaces varied but ongoing employment of live-in staff could mean families would need to meet work, health and safety regulations. Whether parents are required to pay employee entitlements for nannies and babysitters they hire independently comes down to how often they are hired and the hours they work. However, those rules are a grey area within the industry.
Mother-of-one Joanna Shulman hires a babysitter about once a fortnight. She pays about $25 an hour for a friend or a friend-of-a-friend to look after Amelia, seven months.
“I like to know who’s coming so we would prefer not to go through an agency,” she said.
“The reason we don’t get a babysitter that often is because of the cost. It’s about $25 an hour so for
four hours, that’s $100 a night.”
Ms Shulman said having to pay extra for insurance wasn’t as important to her as knowing who was looking after her child.
“Cost plays into it, but I’d rather find someone we know. We have cleaners come in and we don’t have insurance for them.”