Do you make some of your income from tips?  Do you declare them properly?  The Canadian Revenue Agency is on it if you don’t…


The agency says it’s becoming easier for them to catch unreported tip income and they are planning to continue targeting those who don’t pay up.

Reports say in particular that bars and restaurants have been identified as being at “higher risk” of non-compliance on taxes and when a sector has been identified as being at high risk for non-compliance, the CRA will focus audit efforts in this sector until an improvement in compliance is noted.

The CRA says it doesn’t directly go after servers’ earnings; rather, audits of servers are usually an extension of a review of a particular bar or restaurant.



The CRA targeted Murphy Hospitality Group, which owns restaurants around Prince Edward Island. Management reportedly told media that as many as 200 staffers may have been audited by the agency of which one is reported to have been hit with a $15, 000 tax bill according to the Charlottetown Guardian.

The following is the Canada Revenue Agency’s response to this story:

“As the protection of the taxpayer’s information is of utmost importance, the confidentiality provisions of the Income Tax Act prevents the Canada Revenue Agency (CRA) from discussing the details of specific cases.

“The CRA is committed to protecting and maintaining the fairness and integrity of Canada’s tax system for all Canadians, with a balanced approach of education and compliance. The CRA works with Canadians, through education and outreach, to inform them of their tax obligations.

“Individuals must report all income earned, and comply with any tax reporting requirements, like any other Canadian. The CRA is aware that reviews may prove challenging to individuals affected and works with them on finding solutions.”



The CRA has repeatedly taken criticism, that it goes overboard hitting the little guys by targetting restaurant servers while ignoring wealthy businesses and people who use complex schemes to send money offshore to avoid taxation.

But with the recent revelations of widespread offshore tax avoidance in the Panama Papers and Paradise Papers, that appears to be changing.

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