Income received by an individual in the form of tips and gratuities related to employment is considered taxable income for the year and must be reported on the personal income tax return. Individuals who receive such income should keep a record of the amount they receive in each form. These records do not have to be submitted with the income tax return, but they should be available if the Canada Revenue Agency (CRA) requests to see them.
The CRA generally expects a person working at a restaurant to have earned tips and gratuities so a failure to report such income on a tax return might result in a query from the CRA when the return is being assessed.
2. I’ve moved for employment in 2015. Can I claim any tax deductions for my moving expenses?
If you moved in 2015 for employment, self employment, or to attend a university or other post-secondary educational institution, you may claim a tax deduction for certain moving expenses if:
If you move for employment purposes, you may not claim a deduction for any expenses paid by your employer on your behalf that were not included as a taxable benefit to you. Expenses you incurred that your employer reimbursed or expenses for which you have received an allowance are also not deductible unless the reimbursement or the allowance is included in calculating your income.
3. I am confused by my employment medical benefits. Are they considered taxable benefits?
In general, when employers provide employees with benefits in addition to their regular salary, the value of such benefits must be included in the employee’s income as a taxable benefit.
With respect to employer provided medical benefits, the rules can be quite complex. For example, if the employer pays an employee’s Medical Services Plan (MSP) premiums, it is a taxable benefit to the employee. On the other hand, premiums for group medical plans, including private extended health plans, vision care plans, prescription coverage, and dental plans paid by the employer, are not a taxable benefit to the employee, provided the plans only pay the costs of medical expenses that are deductible under the Income Tax Act. The employee participating in such plans cannot claim a tax deduction for the medical costs incurred except to the extent the costs are not covered or reimbursed by the employer paid plan.
The benefits or payments from certain kinds of insurance plans such as disability insurance and sickness income maintenance plans will be tax-free to the employee even if the plan is organized and sponsored by the employer, provided the employee pays the premiums. If the employer pays the premiums as a taxable benefit, a portion of the payment to the employee from such plans may be taxable to the employee. If an employer pays the premiums for the employee under a group term life insurance plan the premium will be a taxable benefit to the employee but a payment out of the plan on the death of an employee will not be taxable.
Tax Tips provided by Chartered Professional Accountants of British Columbia (CPABC) Tax rules relating to these tax tips are complex. This is not intended as tax advice and you should not make tax decisions based solely on the information presented in these tips. You should seek the advice of a chartered professional accountant before implementing a tax plan or taking a tax filing position.