FREE WEBINAR

Federal Court of Appeal Ruling: Tips, source deductions, and how to protect yourself from liability

Originally Presented: October 6, 2022

 

Join Restaurants Canada and James Rhodes, BSc, LLB, of Taxation Lawyers for a conversation, on tip-out systems that protect your business from this liability!
 
The Federal Court of Appeal ruling recently upheld a lower court's decision regarding a Halifax restaurant's obligation to submit income tax, Employment Insurance, and Canada Pension Plan contributions on employee gratuities. This case relates to electronic tipping in the restaurant and how those tips were handled and distributed among employees. Restaurants must now submit approximately $100,000 in source deductions on electronic tips to the Canada Revenue Agency (CRA).  
 
As this decision is not the first time our tax courts have ruled on this issue, the case illustrates the need for restaurateurs to ensure their tip-out systems protect their business from liability. To help you understand the liability and avoid a similar situation, James Rhodes, BSc, LLB, of Taxation Lawyers will join us to discuss:  
  • How gratuities should be kept separate from sales revenue and payroll in a separate non-business-related account that is managed and dispersed by employees
  • How the tip-out system is voluntary and what this means
  • How to protect yourself and your business from tip-out liabilities   
James Rhodes, BSc, LLB, has been helping restaurants implement tip-out systems that make gratuity distribution as easy as possible for employees while protecting restaurants from potential liabilities associated with EI and CPP.

 

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Our Speakers

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James Rhodes

BSc, LLB
Taxation Lawyers

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Richard Alexander

Vice President, Atlantic Canada
Restaurants Canada

About Restaurants Canada

Restaurants Canada is a national, not-for-profit association representing Canada’s diverse and dynamic restaurant and foodservice industry. Restaurants Canada members comprise 30,000 businesses in every segment of the industry, including restaurants, bars, caterers, institutions and their suppliers. We work on their behalf with all levels of government in support of a strong restaurant industry that contributes jobs, investment, and a wide range of culinary choices to communities across the country.

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