Canada Revenue Agency keeps eye on servers not claiming their tips

The Shark Tank bartenders from left to right: Lauren Eckert, Maddy Bateman, Deanna Leigh and Jara Hughes. Photo by Loyalist Life

By Demii Niles 

BELLEVILLE – Some servers say they’re not aware that the Canada Revenue Agency is doing a surge of tax audits on servers and bartenders who are not claiming their tips.

Lauren Eckert, a first-year Loyalist College paramedic student, started bartending in September at the Shark Tank Pub at Loyalist College. She said she also bartends for the Belleville Senators games at the Quinte Sports and Wellness Centre and was not aware that she had to claim her tips on her income tax return.

“I generally don’t keep track of my tips,” Eckert said. “I suppose it’s fair as long as you make a substantial amount. But for example, at the school pub with server wage and tips I barely make over minimum wage.”

Paul Murphy, communications manager for the Canada Revenue Agency, said in an email to QNet News,”Audits related to the food service sector occur regularly across the country and have for many years. A typical area of audit in these businesses includes ensuring appropriate reporting of tips by their employees.” 

There has not been a recent increase in audit activity in this sector, he said, adding that it’s remained consistent in the last few years. The CRA is committed to protecting and maintaining the fairness and integrity of Canada’s tax system for all Canadians by making sure that individuals and businesses are aware of their tax obligations, Murphy said.

“The CRA aims to influence positive compliance behaviours and increased taxpayer understanding by improved communication, targeted outreach, accessible taxpayer services and education,” he said.

Murphy said Canada’s tax system is a self-assessment, and as such, it is an individual’s responsibility to correctly file their taxes. He said that the CRA uses a variety of tools and techniques to identify unreported income, including third-party data.

“Most food and beverage establishments use electronic point of sales systems that provide detailed information on transactions including the number of tips paid,” he said. “If individuals or organizations disagree with the CRA’S assessments objection and appeals processes available to them”

Some Loyalist College students said it is hard to file their taxes correctly when their tips are not always the same amount and that it is something servers and bartenders struggle with.