Nanny Tax

The lines between employee and contractor are often blurred so it’s important, as a nanny, that you clarify your status and therefore your legal and taxation obligations.

Employee Contractor
Paid for time worked; a price per activity or item; a commissionPaid for a result achieved and based on a quote provided
Not responsible for providing equipment and materialsResponsible for providing equipment and materials
Family provide public liability insuranceSupply your own public liability insurance
Agree to provide your personal servicesAble to determine the way the work is completed
Must perform the duties yourselfAble to delegate the work
Work hours are set by an agreementAble to accept or refuse work

Overall, whether you are officially an employee or a contractor (despite the holding of an ABN) comes down to the degree of control that the family you work for can exercise over you. If the family has the right to direct how, when, where, and who is to perform the nanny duties in their home and with their children then you are more than likely to be considered an employee in the eyes of the ATO.

You can find out more at the ATO’s Employee/Contractor calculator here

As a contractor you do have certain freedoms and rights:

  • Entitled to worker’s compensation and Superannuation
  • Can claim travel to and from work as well as employment related expenses such as books, craft supplies and immunisations
  • Free to delegate and sub-contract work as well as work for other businesses or member of the general public
  • Can access the small business $20K asset write-off scheme recently announced
  • And you are in a position to make a profit (or a loss)

But there is also a downside to being a contractor:

  • No paid leave – sick, annual, maternity, long service
  • No notice period upon termination of a contract
  • Need to lodge your own tax and cover insurance
  • No protection from the Fair Work Ombudsman, WorkCover or ATO

The nanny industry has become the target of ATO scrutiny over the last few years so it’s important to ensure that you are fulfilling your legal and taxation obligations correctly. You can learn more at

Learn more about being a nanny with our resources including first aid, police checks, find out how The Nanny Emporium works or contact us today.