Tips - Gratuities
Tips 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
