Even as a stay at home Mom, she's earning income by looking after other people's (your) children and so she must follow day care regs for your province, even if it just your children and hers. She be classed as unregistered/private day care so if she has more than one child, again depending on province you live in, she might not be allowed to take all 3 of yours.

She also has to declare income from your children to CRA otherwise it's tax fraud. It not matter if she call herself a babysitter, or doing you favour, by being paid it income.

As parent in Canada, you can claim tax credit on child care expenses. Up to $8,100 for your 1 year old, up to $7,000 or $8,000 for your 5 year old and up to $5,000 for you 7 year old. She must give you receipt otherwise you missing out on tax credit to for child care expenses up to $20,000 per year.

With no receipt, you get no tax credit.

Also, if she declare income to CRA, she be allowed to claim expenses. Part of her power, water, mortage interest or rent, internet, insurance, can all be claimed by her as a tax credit which will lower her tax bill to almost nothing. She can also claim 100% of cost of food she give your children as long as she keep her receipts. Again, this lower her tax bill and save you extra cost of providing food.

Working for cash, mean no tax credit for either you, and a potential fraud charge plus investigation by CRA. There is a tip off line, where anyone can call and report her. Is it worth that risk to put your friend in such position?

The rate for child care, both with receipt or without, varies on location. Here not much difference in prices. If you want rate for your area, you need to say where that is, or use the home page, type in your postal code and see what local rate is.

To claim this, you need a receipt from your day care provider (day care provider means anyone who is paid to look after your children who is not a relative, like your friend).