Tips - GratuitiesTips and/or gratuities are taxable income and should be included in your tax return.
At the Federal level, there are two kinds of tips: controlled tips and direct tips.
Controlled tips are part of the total remuneration of the employee and are subject to CPP/QPP and EI deducted at the source, whereas direct tips are gratuities that the customer pays directly to the employee.
For residents of Quebec, there are establishments where the employee must report tips to his/her employer at the end of each pay period, and other establishments that are not subject to this requirement.
The following procedure is intended for employees who receive direct tips and/or employees of establishments that are not subject to the obligation of the employee to report his/her tips; and want to report this income.
For Quebec residents.
To report this income, please follow these steps:
1. On the "Left-side menu in the Interview tab", select the "Controls" section
2. On the screen to your right, for the question "Do you wish to make additional QPP contributions on optional income such as tips?", answer "Yes".
3. Return to the "Left-side menu on the Interview tab", select the "T4 and employment income" section.
4. On the screen to your right, inside the group "Other", click on the plus "+" icon next to the option "Tips".
5. On the page, "Tips", enter the amount of your tip income in the appropriate field.
6. If you want to add another income, click on the plus "+" toward the end of the line and repeat the procedure.
For residents of other provinces and territories, follow these steps.
1. On the "Left-side menu in the Interview tab", select "T4 and employment income".
2. On the screen to your right, in the "Other" group, click the plus "+" sign icon to the right of the "Tips" line.
3. On the "Tips" page, enter the amount of your tip income in the appropriate field.
4. If you want to add another income, click on the plus "+" on the far right of the line and repeat the procedure.
5. To report this income to CPP, select "T4 and employment income".
6. On the right-hand page, scroll to the "CPT20" section and click on the plus "+" sign located to the right of the line "CPT20 - CPP Election for Other employment earnings".
7. On the page that appears, on the first line choose the income that corresponds to your situation from the drop-down menu. On the second line, enter your tip income and enter the address of your employer.
The amount will be transferred by the program to line 10400 of the Federal return and, for residents of Quebec, on line 107 with code 01 displayed on line 106 of the Quebec return.
The program will calculate the additional contribution required and will report the amount on line 42100 of the Federal tax return for individuals who contribute to CPP.
For Quebec residents, the program will calculate the additional amount to be contributed to QPP and will report the amount on line 445 of the Quebec return.
For more information, please visit the following links:
For the CRA:
https://www.canada.ca/en/revenue-agency/services/tax/individuals/topics/about-your-tax-return/tax-return/completing-a-tax-return/personal-income/line-104-other-employment-income/line-104-employment-income-reported-on-a-t4-slip.html
For Revenu Québec:
https://www.revenuquebec.ca/en/online-services/forms-and-publications/current-details/co-1029.8.33.13-t/
ID: 20191113104750NA.xml
Webpage: KPA310-20191113104750NA.htm