Restaurant finds itself in hot water with CRA over servers' electronic tips — via financialpost Taxes PersonalFinance
Put simply, your employer is legally required to withhold and remit federal and provincial income tax to the Canada Revenue Agency, as well as Canada Pension Plan contributions and employment insurance premiums.Sign up to receive the daily top stories from the Financial Post, a division of Postmedia Network Inc.By clicking on the sign up button you consent to receive the above newsletter from Postmedia Network Inc.
Under the EI Act, employers must contribute 1.4 times the employee premiums, or 2.21 per cent of insurable earnings, with a 2022 maximum premium of $1,334 per employee. On that sheet, the server records their electronic tips, the cash received, a kitchen staff “tip-out” , and an amount equal to two per cent of the electronic tips . The restaurant retains the tip-out to pass along to its kitchen staff and the processing charge to cover its credit-card fees. The net amount is the server’s “net electronic tip.”
At the end of each shift, each server also prepares two envelopes in which they place cash to “tip out” the onsite restaurant manager and assistant manager — two per cent — and the support staff at one per cent per support staff person .Article content
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