Tip-Allocation Mechanism (also known as the 8% rule)
The minimum amount of tips that an employee must declare is set at 8% of tippable sales before taxes. Employees who report tips of less than 8% of their tippable sales will be allocated an amount of tips, so that their tips equal 8% of their sales. Tippable sales do not include sales of food or beverages for consumption elsewhere than on the premises, such as food sold at a takeout counter or food that is delivered.
For example, if you report tips equal to 6% of your tippable sales, your employer will allocate an additional amount of tips representing 2% of your sales. With this extra 2%, your total tips will equal 8% of your sales. The employer's allocation will be based on the tips you reported before any distribution of tips to coworkers under a tip-sharing arrangement.
The 8% rule does not apply to certain types of workers (such as delivery persons, doormen, porters, etc.) who do not make sales, but who do receive tips that must be reported. Furthermore, if the amount of tips you receive is, for example, 15% of your tippable sales, you must report the full amount of your tips and not just 8% of those sales.
If the total of your tips is often less than 8% of your sales, the 8% allocation rate may be too high. An employer can ask Revenu Québec to reduce the allocation rate for a period in the year if the tips collected are less than 8% of the employees’ sales.
If your employer does not wish to ask Revenu Québec for a rate reduction, you may do so, provided your request is signed by a majority of the employees of the establishment or a majority of the employees who carry out that particular type of sales. To do so, file a Request for a Reduction in the Allocation Rate (form TP-42.15-V).