FMHC Direct-Hire Payroll
CRA Remittances, WSIB and Employer Responsibilities
Hiring a caregiver directly through Family-Managed Home Care gives your family greater control — but also makes you an employer. Here's what that means.
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Introduction
Hiring a caregiver directly through Family-Managed Home Care gives your family greater control over who provides care, when services are delivered, and how the arrangement is structured.
It also makes the FMHC contract holder an employer.
That means paying the caregiver is only one part of the process. You may also need to calculate payroll deductions, remit amounts to the Canada Revenue Agency, provide vacation pay and public holiday entitlements, issue pay statements and T4 slips, and determine whether WSIB coverage is required.
For many families, this is the most intimidating part of direct hire. The caregiver relationship may feel straightforward, but payroll introduces a different set of responsibilities, deadlines, and documents.
The good news is that once the payroll process is set up properly, it becomes a predictable routine.
Still deciding between care arrangements?
If you are still deciding between an agency, independent contractor, and direct-hire arrangement, start with our FMHC Care Arrangement Guide.
View Care Arrangement GuideIf you have already chosen direct hire, this guide explains what happens next.
What Direct Hire Actually Means
Under a direct-hire arrangement, the family employs the caregiver.
The employment relationship is between the FMHC contract holder and the caregiver, even where a bookkeeper calculates payroll or prepares the monthly financial reporting.
The family remains responsible for ensuring that:
A qualified bookkeeper can manage much of the calculation, documentation, monitoring, and reporting work. However, the CRA payroll account, WSIB account where applicable, and legal employer obligations remain in the family's name.
For a broader overview of contract-holder responsibilities, see our Complete FMHC Guide.
Before the First Payroll
The best time to establish the payroll process is before the caregiver receives the first payment.
Waiting until after wages have been paid can make it more difficult to reconstruct deductions, determine the correct remittance period, and prepare compliant payroll records.
Direct-Hire Payroll Setup Checklist
| Requirement | Why It Is Needed |
|---|---|
| Written employment agreement | Documents the wage, pay frequency, vacation treatment, duties, and employment terms |
| CRA Business Number and payroll program account | Allows payroll deductions and employer contributions to be remitted |
| Caregiver's Social Insurance Number | Required for payroll records and T4 reporting |
| Federal TD1 form | Tells the employer which federal tax credits to apply |
| Ontario TD1 form | Tells the employer which Ontario tax credits to apply |
| Signed timesheet process | Supports the hours used for payroll and FMHC reporting |
| Established pay frequency | Determines when wages are calculated and paid |
| WSIB review | Determines whether mandatory or optional coverage applies |
| Schedule B review | Confirms the proposed wage fits within the funded rate and approved hours |
CRA identifies the employee's Social Insurance Number, province of employment, and completed TD1 forms as part of setting up employee payroll information.
Do FMHC Families Need a CRA Payroll Account?
If the caregiver is an employee, the family will generally require a CRA payroll program account.
A payroll account is added to a CRA Business Number and is identified by the letters RP.
For example: 123456789 RP 0001
The payroll account is used to remit payroll deductions and employer contributions and to manage year-end payroll reporting.
The account belongs to the family acting as the employer. It should not be registered in the name of the bookkeeper or the caregiver.
Families can review CRA's official payroll account guidance.
Employee Information Required
The caregiver must provide before the first payroll is processed:
- Social Insurance Number
- Completed Federal TD1 form
- Completed Ontario TD1 form
What a Payroll Calculation Includes
A payroll calculation begins with gross pay, but gross pay is not the amount the caregiver receives.
Employee deductions are calculated first. The remaining amount is the caregiver's net pay.
The employer then has additional contributions and employment costs of its own.
A Simple Payroll Example
Assume one payroll produces the following amounts:
| Item | Amount |
|---|---|
| Gross pay | $1,500.00 |
| Employee CPP, EI, and income tax | ($280.00) |
| Net pay to caregiver | $1,220.00 |
| Employer CPP and EI | $115.00 |
| Total employment cost before WSIB | $1,615.00 |
The caregiver receives $1,220.00, but the payroll costs the family $1,615.00 before any applicable WSIB premium.
The difference is not lost. Part represents deductions withheld from the caregiver and sent to CRA. The rest represents the employer's CPP and EI contributions.
This distinction is essential when comparing payroll costs with the Schedule B funded rate.
This is one of the most common reasons direct-hire families accidentally exceed their approved Schedule B funding. They budget using the caregiver's wage and forget that employer payroll costs must come from the same funding envelope.
How Tabber Handles Each Pay Period
Once the family provides a completed timesheet approved by both the family and employee, Tabber prepares a clear payroll summary showing exactly what needs to happen next.
The summary includes:
- Gross pay — The caregiver's earnings before deductions
- Vacation pay — The vacation amount payable or accrued
- Employee deductions — CPP, EI, and income tax withheld
- Net pay — The exact amount to pay the caregiver
- CRA remittance — The combined amount to send to CRA
- WSIB premium — The amount payable where WSIB coverage applies
- Payment deadlines — When each payment must be completed
- Schedule B impact — How the payroll cost compares with the approved hours and funded rate
What Is a CRA Payroll Remittance?
A CRA payroll remittance is the payment the employer sends to CRA after payroll is processed.
It ordinarily includes:
- income tax withheld from the employee;
- employee CPP contributions;
- employer CPP contributions;
- employee EI premiums; and
- employer EI premiums.
The employer temporarily holds the employee deductions and sends them to CRA together with the required employer contributions.
This is why the caregiver's net pay does not represent the family's total employment cost.
When Are CRA Remittances Due?
The family's remittance frequency and due date depend on the remitter type assigned by CRA.
CRA has several remitter categories, including new small employer quarterly remitters, quarterly remitters with an established compliance history, regular remitters, and accelerated remitters.
Eligible new small employers may qualify for quarterly remittances. Regular remitters generally remit by the 15th day of the month following the month in which the employee was paid.
Families should confirm the remitter type assigned to their payroll account rather than assuming every employer follows the same schedule.
Important: Late or missing remittances can result in penalties and interest. CRA's employer guide also addresses consequences for failures to deduct or remit payroll amounts.
Vacation Pay Is an Employment Cost
Vacation pay is one of the employment costs that families need to consider when selecting a caregiver's wage.
For employees with less than five years of employment, the statutory minimum vacation pay is generally 4% of gross wages, excluding vacation pay itself. The entitlement increases after five years of employment.
Vacation pay may be accrued or paid with each payroll where the arrangement is documented and administered appropriately.
The employment agreement should clearly explain:
- the employee's base hourly wage;
- the applicable vacation-pay rate;
- whether vacation pay is accrued or paid with each payroll; and
- how vacation time will be scheduled.
From an FMHC budgeting perspective, the key point is straightforward: Vacation pay is an employer cost and must be included when determining whether the caregiver's wage fits within the Schedule B funded rate.
Understanding WSIB
WSIB's domestic worker policy provides coverage where a domestic worker is directly hired and paid by a private household and works more than 24 hours per week for one employer.
The policy includes categories such as housekeepers, companions, and caregivers of children. Whether a particular FMHC caregiver falls within the domestic worker policy depends on the worker's actual duties and arrangement.
The More-Than-24-Hours-Per-Week Rule
Under the policy:
- a domestic worker employed more than 24 hours per week by one employer is covered;
- a domestic worker employed 24 hours per week or less by one employer is not covered under the mandatory insurance plan;
- working more than 24 total hours for multiple employers does not create mandatory coverage where the worker works 24 hours or less for each individual employer; and
- a domestic worker who is not mandatorily covered may apply for optional insurance.
Important: The WSIB policy says more than 24 hours per week, not "24 hours or more."
If the employee works FMHC-funded and personally funded hours for the same household, consider the employee's complete schedule when reviewing the threshold. The funding source does not create a separate employer.
What If the Caregiver's Hours Increase Later?
A caregiver may begin with a modest schedule and take on additional shifts as the client's care needs change.
For example, an employee may begin at 15 hours per week and later move to 26 hours per week. That change should trigger a new WSIB review.
WSIB should not be assessed once at the date of hire and then forgotten.
Review the employee's WSIB position when:
- the regular weekly schedule changes;
- personally funded hours are added;
- the caregiver begins covering additional shifts; or
- the caregiver regularly exceeds the original schedule.
Staying Within FMHC Funding
The maximum rate in Schedule B is the total funded rate, not necessarily the wage available to offer the caregiver.
The same funding may need to support:
- base wages;
- vacation pay;
- employer CPP;
- employer EI;
- WSIB premiums;
- public holiday costs; and
- other employment costs required by the arrangement.
Wage Versus Effective Cost
A family may have a maximum funded rate of $38.46 per hour. That does not automatically mean the employee can be offered a wage of $38.46 per hour.
The calculation works backward:
Schedule B maximum rate
less employer payroll costs
less vacation pay
less WSIB where applicable
equals an approximate sustainable caregiver wage
Leave Some Room
Avoid setting the wage at the calculator's absolute mathematical maximum. Public holiday pay and other payroll costs can create fluctuations. A modest buffer is generally easier to manage than repeated personally funded top-ups or a wage commitment the FMHC budget cannot consistently support.
Use the calculator
Tabber can review the family's Schedule B, expected caregiver hours, vacation treatment, WSIB position, and proposed pay frequency before the wage is finalized.
FMHC Direct Hire Cost CalculatorOngoing Requirements
Payroll responsibilities continue beyond the monthly payment cycle.
T4 Reporting
The employer must prepare and file the required T4 information return and provide the employee with a T4 slip for the year. The T4 reports employment income and payroll deductions, including CPP, EI, and income tax.
Records of Employment
A Record of Employment may be required when the employee experiences an interruption of earnings or the employment relationship ends.
Common FMHC Payroll Mistakes
Most payroll issues don't come from misunderstanding the rules—they come from small operational misses. Here are the situations we see most often and how to avoid them.
Treating the Schedule B Rate as the Employee's Wage
Use the FMHC Direct Hire Cost Calculator before making the offer.
Paying the Employee Before Opening a Payroll Account
Complete the employer and employee setup before the first payroll.
Assuming Every CRA Remittance Is Due Monthly
Confirm the remitter type through the family's CRA payroll account.
Applying the WSIB Threshold Incorrectly
Monitor the worker's complete weekly schedule, including personally funded hours worked for the same household.
Mixing Vacation, Sick Leave, and Public Holiday Pay
Address each entitlement separately in the employment agreement and payroll process.
Reporting the Full Payroll Cost as FMHC-Funded
Calculate the complete payroll and document a consistent allocation between FMHC and personal funding.
Keeping Incomplete Payment Support
Retain the timesheet, pay statement, and proof of every related payment.
Frequently Asked Questions
Can an FMHC employee be paid once per month?+
The pay frequency should be clearly documented and must comply with the employment agreement and applicable Ontario employment standards. Monthly, semi-monthly, biweekly, and weekly schedules create different payroll periods and workflows. Choose a schedule the family can operate consistently.
Does an employee need WSIB if the employee works exactly 24 hours per week?+
Under WSIB's domestic worker policy, mandatory coverage applies when the worker is employed more than 24 hours per week by one employer. A worker at exactly 24 hours is not mandatorily covered under that policy, although optional insurance may be available.
What if the employee works 20 FMHC hours and 6 personally funded hours each week?+
If the same household employs the worker for all 26 hours, the entire 26-hour schedule should be considered when reviewing the more-than-24-hours WSIB threshold. The funding sources are different, but the worker still has one household employer.
Does working for several families trigger WSIB?+
WSIB's domestic worker policy says a worker who works more than 24 hours in total for multiple employers, but 24 hours or less for each individual employer, is not covered under the mandatory plan on that basis.
Can a family obtain optional WSIB coverage below the threshold?+
WSIB's domestic worker policy says domestic workers who are not covered under the mandatory plan may apply for optional insurance.
Is vacation pay included in the wage?+
That depends on how the employment agreement is structured and administered. Ontario requires vacation pay to be provided, and the treatment should be clearly documented in the employment agreement and on the employee's pay statements.
Does the family file the employee's personal income tax return?+
No. The family deducts and remits payroll income tax based on the employee's payroll information and TD1 forms. The employee remains responsible for filing a personal income tax return.
Can payroll and bookkeeping support be paid from FMHC funding?+
Bookkeeping expenses are addressed within each family's FMHC agreement and eligible-expense allocation. Families should review their Schedule I and individual funding terms. Tabber's FMHC services are structured to fit within the approved bookkeeping allowance where sufficient funding is available.
Have Questions?
Setting up direct-hire payroll for the first time? Not sure if your proposed wage fits within Schedule B, or whether you need WSIB coverage? We're here to help you get your payroll setup right from the start — no commitment required.
Where Tabber Fits In
Most families choose direct hire because they want greater control over care, not because they want to become payroll administrators.
Tabber specializes exclusively in bookkeeping, payroll, and financial reporting for Ontario Family-Managed Home Care families.
This is not general payroll adapted to FMHC after the fact.
Our process is designed around the realities FMHC families face:
- caregiver wages must fit within Schedule B;
- approved hours can vary by month;
- care categories must be tracked separately;
- CRA and WSIB payments must be supported;
- personally funded care must remain separate where applicable;
- every payment must reconcile to the dedicated bank account; and
- Schedule G&H must be completed accurately and on time.
Before Payroll Begins
We review the Schedule B funding, proposed caregiver wage, expected hours, vacation-pay treatment, pay frequency, and potential WSIB obligations.
Every Pay Period
We calculate gross wages, vacation pay, employee and employer CPP/EI, income tax, net pay, CRA remittances, and WSIB premiums where applicable.
Every Month
We connect the payroll records to the FMHC bank account and reporting package before completing Schedule G&H.
Why Families Choose Tabber
FMHC payroll requires more than payroll software. A calculation can be technically correct and still create a reporting problem if it exceeds the funded rate, uses the wrong service category, includes personal costs, or cannot be reconciled to the FMHC bank account.
Tabber brings payroll and FMHC reporting together.
Families receive:
- one point of contact for payroll and monthly reporting;
- calculations built around their actual Schedule B;
- clear payment amounts and deadlines;
- ongoing monitoring of funded hours and costs;
- support for direct-hire and hybrid arrangements;
- organized, review-ready records; and
- a process that becomes routine instead of stressful.
Get Your FMHC Payroll Set Up Properly
If you are preparing to hire a caregiver directly, the best time to establish the payroll process is before the first payment.
Tabber can help you:
- review the proposed arrangement;
- determine whether the caregiver's wage fits within Schedule B;
- identify the CRA, vacation-pay, and WSIB considerations;
- establish the timesheet and payroll workflow; and
- integrate payroll into monthly FMHC reporting.
There is no expectation that you already understand payroll. We will explain what is required, identify what still needs to be completed, and help establish a process that works from the first pay period onward.
Helpful Official Resources
CRA Payroll Overview
CRA: Open or Manage a Payroll Account
CRA Employers' Guide: Payroll Deductions
CRA Payroll Remittance Due Dates
WSIB Domestic Workers Policy
Ontario ESA Guide: Vacation
Ontario ESA Guide: Public Holidays
Tabber is an independent bookkeeping provider and is not affiliated with Ontario Health atHome, the Canada Revenue Agency, the Workplace Safety and Insurance Board, or the Ontario Ministry of Labour. Program, payroll, employment standards, tax, and WSIB requirements can change and may vary based on the family's agreement and actual working relationship. This page provides general information only and does not constitute legal, tax, employment, payroll, medical, insurance, or eligibility advice. Families should follow their signed FMHC agreement, confirm program requirements with their Ontario Health atHome Care Coordinator, confirm payroll requirements with CRA, and obtain legal or WSIB guidance where appropriate.
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This content may not be reproduced, republished, or distributed without written permission from Tabber.
Last updated: August 2026.