Tips Less Than 8% of Sales
If your tips are less than 8% of your tippable sales, your employer must calculate the 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.
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.
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.
The tips on tippable sales that you report determine the amount that your employer allocates to you, if applicable. This amount and your reported net tips are added to your base salary to calculate your source deductions and are shown on your pay slip.
At the end of the year, your employer must give you an RL-1 slip that includes your tips.
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 us to reduce the allocation rate for part of the year if the tips collected are less than 8% of your 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 employees of the establishment or a majority of the employees who carry out that particular type of sales.
To make a request, file a Request for a Reduction in the Allocation Rate (form TP-42.15-V).