Tips in Western Canada - all about them

[James Kendal]

I would like to chime in on this discussion as there are changes afoot at CCRA regarding tips and they are gearing up to go after employer source deductions on tips and if CCRA audits you for previous years they will seek those deductions. We have just gone through an audit as well as a number of other hotels on the Island. Restaurants are low on the radar at this point as CCRA is not prepared to go full tilt (yet) as they could create a liability for Employment Insurance.

Where you (the owner) needs to be careful is how you handle the tips. If you are withholding any cash for more than 24 hours CRA assumes that you are controlling tips. As well, if you the owner, are dictating the way tips are paid out to the house that could also be deemed as control so you should be careful about this.

If you have an autograts on groups or large parties then these tips are contracted and you have to pay GST and T4 these tips.

Several years ago Sooke Harbour House fought an assessment in court and lost, which is public information. This has created a precedent in the courts which the CRA is using. However, there is still no definitive legislation at this time. My only advice is to be careful with:

1. Tip out to the house

2. Group tips and auto tips which can be assessed for GST and source deductions.

3. Withholding tips for any period of time.

We are currently appealing an assessment and I will let you know the outcome.

Cheers,

[jakov]

i have a question about tipping and am not sure whether i should ask it here.

i usually have lunch at a restaurant, well, not quite a restaurant, because i have to walk up to the kitchen and order from the window. i usually carry the plate myself to the cashier and occasionally when there is a line-up and many orders have to be prepared, someone will bring the plate to where i sit after i pay my bill. they do keep the table clean and collect the empty plates.

i am not sure whether i should tip at a place like i described above. oh, forgot to say it is in vancouver.

they have a kind of coins cup beside the cash register; however, i would feel very embarrassed to leave some change in the cup, large or small and i feel that the cashier would also be embarrassed.

could anyone advise me whether i should leave a tip? if i should, how much should i leave and where should i leave the tip, the coins cup or the table?

thank you.

jakov

[kevfoodvan]

Jakov: If you are a regular customer and like the service that is provided then a tip in the tip jar would be fine. Or if your cheque is $8.25 and you say keep the rest and hand them a $10 bill then that is another way around it.

Hope this helps

Kev

i have a question about tipping and am not sure whether i should ask it here.

i usually have lunch at a restaurant, well, not quite a restaurant, because i have to walk up to the kitchen and order from the window. i usually carry the plate myself to the cashier and occasionally when there is a line-up and many orders have to be prepared, someone will bring the plate to where i sit after i pay my bill. they do keep the table clean and collect the empty plates.

i am not sure whether i should tip at a place like i described above. oh, forgot to say it is in vancouver.

they have a kind of coins cup beside the cash register; however, i would feel very embarrassed to leave some change in the cup, large or small and i feel that the cashier would also be embarrassed.

could anyone advise me whether i should leave a tip? if i should, how much should i leave and where should i leave the tip, the coins cup or the table?

thank you.

jakov 

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[Mikeb19]

I am not sure but in Canada to not declare income is illegal.  As of yet I have not seen CRA do as the IRS does in the US and look at the restaurant totals and deem income to servers etc.  I heard a rumour that places in Toronto had talked about this but not sure where it went (and I agree the electonic environment will allow CRA to clamp down sooner rather than later).  I also think it is probably within the owners right to log total amounts and withhold and remit amouts to CRA to make sure taxes are paid (how else will they be - and they SHOULD be paid).  It really bugs me when people gloat about tax free tips.....

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I've seen the CRA audit restaurants as well as individual servers....