Employees Who Receive Tips
Employees who receive tips (for example, restaurant, bar and hotel employees) must report them in full.
Who must report tips?
If you work in a regulated establishment, you must report your tips to your employer at the end of every pay period.
Regulated establishments
The following establishments are generally subject to tip reporting:
- hotels, motels and inns
- restaurants, bars and resto-bars (including those in sports centres, arenas, fitness centres, etc.)
- sugar shacks that sell food for consumption on the premises
- campgrounds that sell food for consumption on the premises
- establishments where meals are sold by a caterer for offsite consumption
You do not have to report your tips to your employer if you work in a non-regulated establishment.
Non-regulated establishments
The following establishments are generally not subject to tip reporting:
- boarding houses
- seniors' residences
However, tips that you do not have to report to your employer and that are not included in boxes S and T of your RL-1 slip must be reported on line 107 (code 1) of your income tax return (TP-1-V).
Reporting tips
If you work in a regulated establishment, you must report your tips in writing to your employer at the end of every pay period by completing a Register and Statement of Tips (form TP-1014.4-V) or an equivalent document. This applies whether you receive tips directly (for example, as a waiter, valet, door attendant, porter, delivery person or cloakroom attendant) or indirectly (for example, as a busser).
Be sure to keep your part of the statement for your records so that you have a copy of the information your employer sent us.
- Tips are the exclusive property of the employee who receives them. If there is a tip-sharing arrangement, the tips belong to the employees concerned.
- Your employer cannot require you to pay credit card fees.
- You do not have to report tips you received as mandatory service charges.
Completing the statement of tips
In the statement of tips, enter your total tippable sales (before taxes), i.e., sales where customers:
- left you a tip in cash during the day;
- left you a tip by credit or debit card that you received during the day;
- did not leave you a tip (even though it would have been customary in Québec to do so).
If you are the head server in a group of employees waiting on the same table, you must include the total tippable sale for the table. That said, we will accept any method of breaking down the sale that is acceptable to us in the circumstances.
Do not include sales of food and beverages for consumption elsewhere than on the premises (for example, sales in a food court or deliveries).
Example – Calculating tippable sales
A hotel employee delivers room service orders. At the end of the day, she calculates her total tippable sales. She also receives a tip for service the day before.
|
Sales (before taxes) paid in cash or by credit or debit card for which cash tips were received during the day |
$600.00 |
|
|---|---|---|
|
Previous sales (before taxes) paid by credit or debit card for which cash tips were received during the day |
+ |
$60.00 |
|
Tippable sales |
= |
$660.00 |
Calculating tips to report to your employer
Follow the instructions below to calculate the net tips to report to your employer for a pay period:
- Add the following amounts:
- tips you received during the day on sales made that day or on a previous day (column B of form TP-1019.4-V);
- tips you received under a tip-sharing arrangement (column D of form TP-1019.4-V);
- any tips you received for work as a valet, door attendant, porter, delivery person or cloakroom attendant that you did not receive under a tip-sharing arrangement (column C of form TP-1019.4-V).
From the result, subtract the tips you remitted to other employees under a tip-sharing arrangement (column E of form TP-1019.4-V).
If, for example, you receive tips equal to 15% of your sales, you must report your total tips and not just the percentage equal to the allocation rate (for example, 8%).
A hotel employee calculates his net tips for the day.
|
Cash tips received during the day on sales made that day |
$88.20 |
|
|---|---|---|
|
Tips received during the day on sales made on a previous day (credit or debit payment) |
+ |
$7.00 |
|
Other tips (as door attendant, valet, porter, etc.) |
+ |
$15.10 |
|
Tips received from other employees under a tip-sharing arrangement |
+ |
$5.25 |
|
Tips remitted to other employees under a tip-sharing arrangement |
− |
$16.00 |
| Net tips received | = | $99.55 |
Tips allocated by your employer
If your tips are less than 8% of your tippable sales, your employer must allocate tips to you.
Allocation rate
The allocation rate is:
- 8%; or
- the rate we determined after receiving form TP-42.15-V, Request for a Reduction in the Allocation Rate, from the employer or employees.
If the total of your tips is often less than 8% of your sales, the 8% allocation rate may be too high. Your employer can ask us to reduce the allocation rate for part of the year if the tips collected are less than 8% of their sales.
If your employer refuses to make the request, you can do so yourself. However, your request must be signed by a majority of the establishment's employees or a majority of the employees who carry out that particular type of sales.
To make a request, file form TP-42.15-V.
Calculating allocated tips
Your employer must allocate to you an amount equal to the difference between 8% of your tippable sales and the amount of your actual tips.
Your employer does not have to allocate any tips to you if, for example, you are a valet, door attendant, porter, delivery person or cloakroom attendant.
Example — Tips allocated by an employer
If you report tips equal to 6% of your tippable sales, your employer will allocate tips equal to 2% of your tippable sales to you, bringing your total tips to 8% of your tippable sales. The allocation is based on your reported tips before distribution to your colleagues.
Your employer's responsibilities
Your employer must collect your statement of tips (form TP-1019.4-V or an equivalent document). At the end of every pay period, they must:
- allocate an amount of tips to you (if applicable); and
- add your tips (the net tips you reported, those your employer allocated to you and those that represent mandatory service charges paid by customers) to your base wages to calculate your source deductions.
At the end of the year, your employer must give you an RL-1 slip that includes your tips.
Why report tips?
The advantages of reporting the full amount of your tips include:
- greater protection if you lose your job or have a work accident
- improved standing with financial institutions
- higher RRSP contribution ceiling
- a retirement pension from Retraite Québec based on all your income
Indemnities
Reporting your tips also increases the amount you receive for paid leave. Vacation pay as well as pay for statutory holidays and for family events such as a marriage, birth, adoption or death are calculated on your base wages plus tips.
If you report all your tips, your employer must take them into account in calculating your paid leave. This also applies, where applicable, to severance pay.
Employment Insurance and Québec parental insurance plan
Your tips, other than those allocated to you by your employer, are also taken into account in the calculation of Employment Insurance benefits and benefits under the Québec parental insurance plan.