Anyone who has worked in the service industry knows one of the biggest perks of the job is the tip money. For a long time, this extra cash has gone untraceable by the government making it easy for servers to rake in a lot of dough, while paying minimum taxes. Well, watch out servers, as things are about to change.
In a recent report, hundreds of people have come forward in PEI that have received notices from the Canadian Revenue Agency (CRA) looking for back taxes on tips that have been unclaimed.
The government is using modern technology to calculate the amount servers are making. They are using the collected information on debit and credit payments that leave a trail to each individual staff member and how much they make in tips in a single shift.
The method has raised some anger in the service industry as they say that it does not account for how much a server ‘tips out’ support staff. The CRA says that servers can always include this in a written statement in their tax information. Also, the digital tracking fails to account for any cash tips given at any given time.
It is a good time to start tracking those tips as the government has been calculating back tax as far as 2014. Many unclaimed tips are also being hit with a financial penalty up to as much as 50% of the owing tax.