A long time ago, when I was young and knew nothing, I served tables.
At the end of each night, I happily pocketed a few meagre sheckels from our customers, grateful for the awful service I provided them.
And thank goodness for everyone I decided not to make customers service a career.
But I look back on those days — knowing what I know now — and think, ‘oops.’
I never kept track of my tips.
Worse yet, I never claimed them on my tax return.
When you’re young, you make those mistakes. But if you’re a server — or if you know one — you need to know better.
No matter what age.
The Canada Revenue Agency considers tips and gratuities as taxable income.
They aren’t gifts.
Servers and anyone else in the hospitality industry must record and report their tips as income.
And there’s really no getting around it. After all, your T4 reveals where you work and the government expects you make tips as a server.
The CRA estimates that wait staff earns anywhere from 100 to 400 per cent of their wages in tips, based on their regular reviews of the restaurant industry.
You’re putting yourself at risk for an audit if you don’t report your additional income, no matter great or small.
The moral of the story is: track your tips in a notebook, on an Excel spreadsheet or on a smartphone app like Mint. Then report the income on Line 104 of your T1 and plan on paying the government 30 per cent of that income on your next tax return.
Can you help?
We sure can. Contact one of our tax specialists and we can ensure your tax return is accurate.
Fill out our contact form or give A1 Accounting a call at 403-226-8297.