A Canadian Independent Contractor Agreement for Nanny and Child Care Services is a contract between a family and an independent child care provider that establishes the terms of a child care engagement. This agreement is specifically designed for situations where the child care provider operates their own independent business, serves multiple clients, provides their own supplies, and controls the methods and routines used to care for children.

It is critically important to understand that the Canada Revenue Agency (CRA) generally classifies in-home nannies and caregivers as employees rather than independent contractors. The CRA's published guidance on employing caregivers, baby-sitters, and domestic workers states that if you hire a caregiver who works in your home, they are generally considered your employee. The CRA applies the four-fold test from the Supreme Court of Canada's decision in 671122 Ontario Ltd. v. Sagaz Industries to assess the true nature of the relationship, examining the degree of control exercised by the family, ownership of tools and supplies, the provider's chance of profit and risk of loss, and the degree of integration into the family's household.

If the CRA determines that the child care provider is actually an employee, the family faces retroactive liability for unpaid Canada Pension Plan (CPP) contributions, Employment Insurance (EI) premiums, and income tax source deductions, plus penalties and interest. Both parties can proactively request a CRA ruling using Form CPT1 (Request for a CPP/EI Ruling) to determine the worker's correct status before any reassessment occurs.

The agreement addresses child safety provisions including emergency medical authorization, background check requirements (Vulnerable Sector Check), transportation protocols with appropriate child restraint compliance, allergy and medical condition disclosure, and confidentiality obligations under the Personal Information Protection and Electronic Documents Act (PIPEDA). For families claiming child care expense deductions under section 63 of the Income Tax Act, the agreement creates a record of the arrangement and payment terms.

Child care services provided to children aged 14 and under are generally exempt from GST/HST under the Excise Tax Act, Schedule V, Part IV, making this one of the few contractor arrangements where GST/HST typically does not apply to the core services.

This agreement is needed when a family engages a child care provider who genuinely operates as an independent contractor rather than an employee. The provider should operate their own registered child care business, serve multiple families, control their own methods and routines, provide their own supplies and equipment, and have the ability to hire substitute caregivers.

The agreement is appropriate for part-time or occasional child care arrangements where the provider maintains their own client base, sets their own availability, and invoices the family for services rendered. It may be suitable for child care providers who operate a home daycare but also provide in-home services to individual families, or for experienced providers who offer specialized care services (such as overnight care, weekend care, or care for children with special needs) to multiple families.

Families should exercise caution before using an independent contractor agreement for a full-time, live-in nanny or a caregiver who works exclusively in the family's home and follows the family's detailed instructions about schedule, meals, activities, and discipline. These arrangements are far more likely to be classified as employment by the CRA. In such cases, the family should consider using an employment agreement and registering as an employer for payroll purposes.

The agreement is also needed when the child care provider will transport children in a vehicle, requiring provisions about driver's licence validity, insurance coverage, and compliance with provincial child car seat regulations. When children have allergies, medical conditions, or special needs, the agreement provides a framework for disclosing these conditions and authorizing the provider to administer medication or seek emergency medical care.

Families who wish to claim child care expense deductions under the Income Tax Act section 63 need documentation of the arrangement, including the provider's name, Social Insurance Number or Business Number, and the amounts paid. This agreement serves as the foundational document for that purpose.

The agreement must identify both parties with their full legal names and Canadian addresses. The provider's information should include their business name if they operate under one, which reinforces their independent business status for CRA classification purposes.

The CRA classification notice is a distinctive feature of this template. It explicitly warns both parties that the CRA typically classifies in-home nannies as employees and recommends requesting a ruling using Form CPT1 before finalizing the arrangement. This notice protects both parties by ensuring they understand the reclassification risk before entering into the agreement.

The independent contractor status clause must address each element of the CRA's four-fold test as it applies to child care: the provider controls the daily activities, routines, and care methods; the provider supplies their own materials, toys, and equipment; the provider bears financial risk and has the opportunity for profit (e.g., fixed-rate contracts for multiple families); and the provider operates independently of the family's household. The clause should note that the provider may serve other families concurrently.

The scope of services section must identify the children by name and age, describe the care duties, and specify the care location. The schedule section should describe general availability while preserving the provider's discretion over specific routines and activities, as a highly prescriptive schedule supports employee classification.

Compensation provisions must specify the payment structure (weekly, bi-weekly, monthly, hourly, or daily rate), the amount in Canadian dollars, and the payment frequency. Since child care services for children under 14 are generally GST/HST-exempt under the Excise Tax Act, this should be noted.

Emergency and medical provisions should designate emergency contacts, authorize the provider to seek emergency medical care, and require disclosure of all allergies, medical conditions, and special dietary or behavioural needs. Transportation provisions should address driver's licence requirements, vehicle insurance, and compliance with provincial child car seat regulations.

The background check clause should require the provider to furnish a current Vulnerable Sector Check and represent that they have no criminal convictions affecting their suitability to care for children. The confidentiality clause should protect the family's personal information, the children's medical records, home address, and daily routines, with a specific prohibition on sharing photographs or information about the children on social media.