New guidance document on tips and taxes

Published August 20, 2018

The taxation of tips is a common source of anxiety for foodservice professionals. Restaurants Canada has successfully lobbied the Canada Revenue Agency to create a guidance document to help small businesses ensure that their employees are informed about how to treat income received as tips and gratuities.

tipping guidance

Download the complete bilingual guide

Tax Tips for Reporting Tips

Workers who report all their tips and gratuities see the following benefits:

  • The additional income they report can be an advantage when applying for a loan or mortgage
  •  Tips qualify as earned income for purposes of registered retirement savings plan (RRSP) contribution limits — this means they will be able to invest more, and deduct more, in RRSPs
  • Workers can choose to make Canada Pension Plan (CPP) or Quebec Pension Plan (QPP) contributions with tips and gratuities they earn — this will increase their CPP or QPP pension amounts when they retire

If you have any questions or concerns, you can send them to Lauren van den Berg, Restaurants Canada National Vice President, Government Affairs, at Lauren@restaurantscanada.org.

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