Tips

Source deductions of income tax, QPP contributions and other employer contributions

In calculating an employee's source deductions of income taxQuébec Pension Plan (QPP) contributions, the employer contribution to the health services fund and the contribution related to labour standards, you must add the following tips to the basic salary or wages:

  • tips that result from tippable sales and that are reported to you by the employee during the pay period on the Register and Statement of Tips (TP-1019.4-V) or an equivalent document;
  • tips that are unrelated to tippable sales (for example, tips the employee received as a hotel valet, porter, doorman or cloakroom attendant) and that are reported to you by the employee on the Register and Statement of Tips (form TP-1029.4-V) or an equivalent document;
  • tips that, because they constitute service charges added to a customer's bill, are distributed to the employee for the pay period and do not have to be reported on the Register and Statement of Tips (form TP-1029.4-V) or an equivalent document; and
  • tips that you allocated to the employee for the pay period because the amount of tips reported was less than 8% of tippable sales (or was less than the percentage that we set further to a request for a reduction in the tip allocation rate).
Important

When you cannot make all the source deductions because an employee's basic salary or wages (in cash) are insufficient, deduct amounts in the following order:

  • Employment Insurance premium
  • federal income tax
  • QPP contribution
  • QPIP premium
  • union dues
  • Québec income tax

Québec parental insurance plan (QPIP) premiums

In calculating an employee's eligible salary or wages for the purposes of the Québec parental insurance plan (QPIP), you must add the amounts of the following tips to the basic salary or wages:

  • tips that result from tippable sales and that are reported to you by the employee during the pay period on the Register and Statement of Tips (TP-1019.4-V) or an equivalent document;
  • tips that are unrelated to tippable sales (for example, tips the employee received as a hotel valet, porter, doorman or cloakroom attendant) and that are reported to you by the employee on the Register and Statement of Tips (form TP-1029.4-V) or an equivalent document; and
  • tips that, because they constitute service charges added to a customer's bill, are distributed to the employee for the pay period and do not have to be reported on the Register and Statement of Tips (form TP-1029.4-V) or an equivalent document.
Note

You are not required to take into account tips that you allocated to the employee for the pay period because the amount of tips reported was less than 8% of tippable sales (or was less than the percentage that we set further to a request for a reduction in the tip allocation rate). These tips are not subject to QPIP premiums.

Fiscal measures respecting the reporting of tips

If you are an employer in the restaurant and hotel sector and your employees carry out their employment duties in a regulated establishment (This link will open a new window) (which is subject to the tax measures respecting the reporting of tips), your employees must submit to you at the end of each pay period a written report of the tips they received directly or indirectly.

The following measures apply to the reporting of tips:

  • Employees must report their tips to their employer at the end of each pay period.
  • Employers must allocate an amount as tips to employees at the end of each pay period, where applicable.
  • Employers must include tips received by and allocated to employees in the calculation of source deductions and employer contributions.
  • Employers can claim a refundable tax credit for the additional payroll taxes they are required to pay on tips.
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