Quote:
Originally Posted by btimbit
Kind of a lose/lose with this one, since there's usually no record of what that person made in tips, and Revenue Canada decides that you got tips, if you get re-assessed they can just tack on an extra amount that you owe them. This number was 10% in the past but I've heard rumblings of it going up. Again seems fair on the surface to catch the dip####s that don't claim anything, but many times what Revenue Canada decides what you earned is way over what you actually earned, so a server could lose a lot of money this way. Even if they claimed their tips 100% accurately, since there's usually no evidence of this income Revenue Canada can decide that you didn't claim enough and say you owe them more money, all off of an income you didn't actually receive.
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I always liked the people who said that they claim 10% of their wage, and that it was a fair number. I argued it wasn't close. At $9 per hour, if you work an 8 hour shift you make about $70. If you only make $7 in tips in those 8 hours, you are either a terrible server, or you work at a dead restaurant. It was even more far fetched when I was serving and the wage was $5.90 per hour. The 10% should be off of your sales, not your salary.
Of my friends who claimed at least 30% of their wages as tips, none were audited. I knew several people in the 10% range who were audited and assessed penalties. Often times, it was to your advantage to claim more in tips, as many part time servers weren't even at the minimum income level that had to pay taxes yet.