Tipping and taxing
Zaphod
part of their income are legally obligated to declare them on their
tax return.
After all it is part of their income.
But here's a question to ponder.
If that's the case then shouldn't people who give tips to restaurants
and cabbies be able to declare them as a tax deduction ?
Frosty
> and cabbies be able to declare them as a tax deduction ?
I think they can.
homepc
"Zaphod" <zapho...@yahoo.ca> wrote in message
news:fa892991-e0c2-434d...@e27g2000yqd.googlegroups.com...
IMHO tips are a way of subsidizing low paying hospitality service jobs.
Employers complain that they can't afford to pay high enough wages, so
customers are obliged to make up the difference one way or another. Either
way customers must pay, so why not just charge a true value for the service
and pay employees a decent wage in the first place. Or better yet, have the
employer award bonuses to those who truly excel at their job instead of
turning a blind eye to veiled threats of poor service if a customer declines
to tip and ventures to return again in the future.
Tips are not a registered charity, they are an indirect payment of wages for
services rendered and would therefore not be tax deductible unless its an
incidental business expense along with meals and so forth.
Other questions that come to mind are why GST and PST or HST aren't applied
to voluntary tips, or why employer payroll taxes aren't applied either.
That Canadian Kid
news:hg1561$va5$1...@news.eternal-september.org:
>
> "Zaphod" <zapho...@yahoo.ca> wrote in message
> news:fa892991-e0c2-434d...@e27g2000yqd.googlegroups.com.
> ..
>> Employees in the hospitality industry who normally receive tips as
>> part of their income are legally obligated to declare them on their
>> tax return.
>> After all it is part of their income.
>> But here's a question to ponder.
>> If that's the case then shouldn't people who give tips to restaurants
>> and cabbies be able to declare them as a tax deduction ?
>
>
> IMHO tips are a way of subsidizing low paying hospitality service
> jobs. Employers complain that they can't afford to pay high enough
> wages, so customers are obliged to make up the difference one way or
> another. Either way customers must pay, so why not just charge a true
> value for the service and pay employees a decent wage in the first
> place. Or better yet, have the employer award bonuses to those who
> truly excel at their job instead of turning a blind eye to veiled
> threats of poor service if a customer declines to tip and ventures to
> return again in the future.
Because tips are usually paid on the service and not so much the food, so
how can they charge before hand the true value of service when they haven't
given it yet.
> Tips are not a registered charity, they are an indirect payment of
> wages for services rendered and would therefore not be tax deductible
> unless its an incidental business expense along with meals and so
> forth.
>
> Other questions that come to mind are why GST and PST or HST aren't
> applied to voluntary tips, or why employer payroll taxes aren't
> applied either.
Since it is not an employer paid benefit there is no way you could put a
payroll tax on it.
homepc
"That Canadian Kid" <Th...@Canadian.Kid> wrote in message
news:Xns9CDFACBFE707...@216.196.97.130...
> "homepc" <wieb...@gmail.com> wrote in
> news:hg1561$va5$1...@news.eternal-september.org:
>
>>
>> "Zaphod" <zapho...@yahoo.ca> wrote in message
>> news:fa892991-e0c2-434d...@e27g2000yqd.googlegroups.com.
>> ..
>>> Employees in the hospitality industry who normally receive tips as
>>> part of their income are legally obligated to declare them on their
>>> tax return.
>>> After all it is part of their income.
>>> But here's a question to ponder.
>>> If that's the case then shouldn't people who give tips to restaurants
>>> and cabbies be able to declare them as a tax deduction ?
>>
>>
>
> how can they charge before hand the true value of service when they
> haven't
> given it yet.
>
I would expect to pay more for service at Ray and Jerry's than I would at
the Sal's.
>>
>> Other questions that come to mind are why GST and PST or HST aren't
>> applied to voluntary tips, or why employer payroll taxes aren't
>> applied either.
>
> Since it is not an employer paid benefit there is no way you could put a
> payroll tax on it.
I would argue that if someone is making ongoing regular tips ( for argument
sake ) of $300 a week, that person will come to depend upon this income when
budgeting their living expenses. Wouldn't it make sense to link EI & CPP
premiums & benefits to this extra income? The employer benefits indirectly
by having customer tips subsidize his payroll expense without any payroll
tax obligation to his/her business. Is this fair to the employee in the
long run?
>
That Canadian Kid
news:hg198r$ae$1...@news.eternal-september.org:
>
> "That Canadian Kid" <Th...@Canadian.Kid> wrote in message
> news:Xns9CDFACBFE707...@216.196.97.130...
>> "homepc" <wieb...@gmail.com> wrote in
>> news:hg1561$va5$1...@news.eternal-september.org:
>>
>>>
>>> "Zaphod" <zapho...@yahoo.ca> wrote in message
>>> news:fa892991-e0c2-434d-96be-2d06c9d9d256
@e27g2000yqd.googlegroups.co
>>> m. ..
>>>> Employees in the hospitality industry who normally receive tips as
>>>> part of their income are legally obligated to declare them on their
>>>> tax return.
>>>> After all it is part of their income.
>>>> But here's a question to ponder.
>>>> If that's the case then shouldn't people who give tips to
>>>> restaurants and cabbies be able to declare them as a tax deduction
>>>> ?
>>>
>>>
>>
>> Because tips are usually paid on the service and not so much the
>> food, so how can they charge before hand the true value of service
>> when they haven't
>> given it yet.
>>
>
> I would expect to pay more for service at Ray and Jerry's than I would
> at the Sal's.
I would suggest good service is good service and bad service is bad
service is bad service no matter where it is at. Service is just that
"service" and it is not dependant on establishment. You could have a
waitress or waiter who works at both Sal's and Ray and Jerry's and give
you the same service at either place, so they deserve the same tip.
Implying that one place gives better service than the other is wrong
because service depends on the people not the establishment.
>
>>>
>>> Other questions that come to mind are why GST and PST or HST aren't
>>> applied to voluntary tips, or why employer payroll taxes aren't
>>> applied either.
>>
>> Since it is not an employer paid benefit there is no way you could
>> put a payroll tax on it.
>
>
> I would argue that if someone is making ongoing regular tips ( for
> argument sake ) of $300 a week, that person will come to depend upon
> this income when budgeting their living expenses. Wouldn't it make
> sense to link EI & CPP premiums & benefits to this extra income? The
> employer benefits indirectly by having customer tips subsidize his
> payroll expense without any payroll tax obligation to his/her
> business. Is this fair to the employee in the long run?
Tips are not yet a mandatory requirement, except with some
establishments charging a fixed rate when dealing with groups, I
personally think this is wrong. Whether a person is dependant on their
tips or not is not the issue, the fact of the matter tips are not
mandatory and therefore not regulated like min wage. As it goes anyone
working in a service industry that regularly gets tips has to claim 10%
of their salary as tips whether they make more or less.
DevilsPGD
<wieb...@gmail.com> was claimed to have wrote:
>I would argue that if someone is making ongoing regular tips ( for argument
>sake ) of $300 a week, that person will come to depend upon this income when
>budgeting their living expenses. Wouldn't it make sense to link EI & CPP
>premiums & benefits to this extra income? The employer benefits indirectly
>by having customer tips subsidize his payroll expense without any payroll
>tax obligation to his/her business. Is this fair to the employee in the
>long run?
Tips are a taxable income, but they're paid directly from the customer
to the individual without a true employer relationship so there isn't a
T4 or similar needed.
As far as linking EI or CPP to it, this would seem to make sense,
although I'm not sure if it's worth the hassle or not.
Zaphod
> "Zaphod" <zaphod4...@yahoo.ca> wrote in message
But if I was an employer who paid my staff a decent wage, that money
would be tax exempt as a business expense.
But if an employer is not paying a decent wage and I'm subsidizing it
by tipping his staff, then shouldn't that tip be tax decuctable too ?
homepc
Here's a little quote from a movie called The Corporation. They are
discussing sociopath behavior of large corporations, but in this case, it
loosely illustrates the same behavior of some employers who deliberately
underpay their staff and force them to rely upon customer tips to eke out a
decent living:
"To whom do these companies owe loyalty? What does loyalty mean? Well, it
turns out that that was a rather na�ve concept anyways as corporations are
always owed obligation to themselves to get large and to get profitable. In
doing this, it tends to be more profitable to the extent that it can make
other people pay the bills for its impact on society. There's a terrible
word that economists use for this called 'externalities'.
An externality is the effect of a transaction between two individuals on a
third party who has not consented to, or played any role in the carrying out
of that transaction. And there are real problems in that area. There's no
doubt about it.
Running a business is a tough proposition. There are costs to be minimized a
every turn, and at some point the corporation says, you know, let somebody
else deal with that."
So, you get stuck with paying tips, and no, you don't get any tax write
offs. Sorry pal!