Tips are a significant source of income for employees who perform this kind of work.
The Quebec Ministère du Revenu has decided to include tips as income by introducing the obligatory declaration of tips for hotel and restaurant employees effective January 1, 1998.
In the interest of greater fairness among recipients, Income Security decided to follow suit.
To do this, it opted to be guided by Revenu Québec’s tax policy.
INCLUDING TIPS IN THE CALCULATION:
Tips received by an employee must be included in the calculation of his or her work income.
The way to determine the amount of these tips differs depending on whether the work involves an establishment that has tippable sales in the hotel and restaurant industry and is covered by the regulation, or some other kind of work where current practice is that a tip may be given which may or may not be based on the amount of the sale.
In the hotel and restaurant industry, if working for an establishment covered by the regulation, Revenu Québec requires that an employee declare all tips received directly or indirectly, and requires that the employer pay the employee any difference needed to increase the amount declared by the employee to a minimum of 8% of tippable sales. This initiative is supported by the Commission des normes du travail which requires that the employer give the employee a pay slip showing these tips. Therefore, it is a simple matter for the officer to find out the amount of tips by asking the employee to give him or her a copy of the pay slip.
However, delivery persons are an exception. Since the employer does not have to top up the employee’s tips, the officer must find out from the employee the amount of tips he or she has received.
For delivery persons as for all other jobs that are not subject to the compulsory declaration of the employer, the amount of tips to be included in the calculation is the amount the employee must declare to Revenu Québec under “other employment income”. Therefore, the officer must ask the recipient for the amount of tips that he or she receives that is not included in his or her income.
Consequently, tips are calculated as follows:
- Hotel and restaurant industry, in an establishment covered by the regulation, for tippable sales:
- amount of tips declared and allocated as indicated on the employee’s pay slip.
- Hotel and restaurant industry, in an establishment covered by the regulation, for sales made by a delivery person:
- amount of tips declared by the employee
- All other employment that involves tips:
- amount of tips declared by the employee.
DEFINITIONS:
Tippable sales:
Sales which, according to current practice, are likely to result in clients paying a tip, with the exception of food and drink to be consumer off the premises of the establishment covered by the regulation (for example, sales at counters and sales that involve a delivery).
These are, in fact, cases where the client uses the amount of the transaction to determine the amount of the tip.
Therefore, the following employees for example are not involved in tippable sales: hotel valets, porters, baggage handlers, parking valets, delivery persons, cloakroom attendants, bussers, employer’s spouse, etc.
Tips declared:
The tips declared are tips declared to the employer by the employee at the end of each pay period and include all tips resulting from tippable sales and all tips that are not related to such a sale (for example, tips received by a hotel valet, a porter, a parking valet, a baggage handler, a delivery person or a cloakroom attendant).
Establishment covered by the regulation:
- any establishment that is designed to offer, in exchange for remuneration, accommodation, food or both (hotels, motels, inns, restaurants, restaurants in sports clubs (located at sports centres, skating rinks, fitness centres, etc.), restaurants at campgrounds, etc.);
- premises where alcoholic drinks are sold to consumers on site (bars, bar-restaurants, bars in sports clubs (located at sports centres, skating rinks, fitness centres, etc.), bars at campgrounds, etc.);
- a train or a ship operated by a company that does business almost exclusively (90% or more and in which meals and drinks are served;
- any location where meals to be consumed off the premises are sold, either to be delivered or served by an employer’s staff (a caterer for example), as part of operating a business.
NOTE: Delivery persons work for establishments covered by the regulation, but the employer does not have to top up their tips.
Establishment not covered by the regulation:
- an establishment offering mainly accommodation, food or both in exchange for remuneration paid weekly, monthly or yearly (rooming houses, senior citizens’ homes, etc.);
- an establishment operated by a teaching institution, a hospital, a residential centre for the needy or victims of violence, or any other similar institution;
- an establishment operated by a volunteer or other similar organization (non-profit organization for example) that occasionally offers food and drink;
- a cafeteria;
- an establishment operating in the fast food industry where employees do not
usually receive tips from their clients.
Pay slip:
Pay stub that the employer must give an employee at the same time as his or her paycheque. It includes, among other things, the amount of tips declared by the employee and the amount of tips that the employer has allocated to the employee.