Advantages of Reporting Tips
The advantages of reporting the full amount of your tips include:
- greater protection if you lose your job or have a work accident
- an improved standing with financial institutions
- a potentially larger pension paid under the Québec Pension Plan during your retirement that is based on all your income
- the possibility of having a higher RRSP contribution ceiling
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 the basic salary plus tips.
Therefore, if you report all your tips, your employer must take them into account in calculating the prescribed indemnities to which you are entitled. This also applies, where applicable, to severance pay.
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. Make sure you receive a statement with each pay. The statement should show the calculation of your net wages, and indicate:
- the amount of tips you reported
- any tips allocated to you by your employer
If your tips represent less than 8% of your sales, a measure known as the tip-allocation mechanism applies.