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Canada Revenue Agency and Tips

Feb 20, 2018 bcrfauser01
Minimum-wage

A news item from PEI this morning tells us CRA is auditing the employees of a popular restaurant chain for undeclared tips. 200 plus employees have received letters from CRA accusing them of failing to declare the full amount of the tips they received.

>> CRA has been relatively soft on the issue of undeclared tips in recent years, but this crackdown could signal change.

Today might be a good day to remind your employees that tips are no longer untraceable. POS transactions can be audited and the almost 100% of the amount of tips each employee
received in any time period is recorded. The audit process in inconvenient for the restaurant and potentially disastrous for employees. Fines and interest on unpaid taxes can financially ruin a worker.

Remind your employees to:

  • Keep an accurate record of the tips they receive each shift
  • Keep a record of the amount they tip out to the back of house.
  • Set some of their tips aside to pay for taxes
  • Declare the tips they have received when they file their income tax return.

As their employer, you can offer to deduct more income tax from their cheques in order to soften the blow when tax time rolls around.

If the restaurant collects all the tips and pays them out by cheque or cash at regular intervals, CRA requires taxes and other withholdings already be taken off the amount paid out.

If you have any concerns or questions about tips, contact Gillian at the BCRFA 604 505 2374 or gmacgregor@bcrfa.com.
Don’t take chances and counsel your employees not too, either.