A little while back, I was the main source for an article in a Globe and Mail about the taxation of tips in Canada. I’ve written about taxing tips before, here and here. In this post, I’ll give an update and discuss two problem areas that most restaurateurs need to know about. Continue reading “More on the Taxation of Tips”
A restaurateur approached me just after he had received notice that his bar was going to be reassessed for HST on unreported sales. This was a fairly typical situation that many bar and restaurants find themselves in after an audit. There is always a way to “fight” or appeal these cases, at least in part. So, I took the case. Continue reading “Another Tax Appeal Home Run”
It was kind of fun trying to come up with a decent headline for today’s article. Tips are in the news a lot, lately. Servers, and others who receive tips, don’t like handing out a portion of their tips to other co-workers and especially not to the “house” (management). Now, we find that they don’t like “tipping out” to the big house, either! It’s not like we didn’t know this, but apparently, the CRA is just starting to take notice!
Continue reading “Taxing Tips”
A few months ago, Dining Date Night began offering customers a 30% discount at various restaurants in Toronto. In order to get the discount, a customer books a reservation on a website and pays a $10 fee to Dining Date Night. When the customer visits the restaurant, 30% of the total bill (before taxes) is deducted as a discount. This type of promotion is relatively good for both the consumer and the restaurant that provides the discount, because the restaurant can restrict the hours when reservations may be taken.
Continue reading “Percentage Discounts”
I’ve written a couple of articles about Groupon on my sister blog, Canadian Restaurateur. This is part of a series that will cover accounting for Groupon certificates, setting up your Point of Sale (POS) system to properly track coupons and discounts, using QuickBooks to enter Groupon transactions, examining the tax treatment of Groupon certificates (this one), and finally, determining whether your restaurant should consider Groupon.
Continue reading “Groupon Taxes”
Many restaurant owners use their automobiles for picking up supplies for the business, researching other restaurants, and making trips related to the restaurant’s operations. In Canada, individuals are able to claim a reasonable portion of their automobile expenses against their employment income from the business. Even if you don’t draw a salary, you’re still considered an employee, by being a director of the company.
Continue reading “Proving Automobile Business Use”
If your restaurant pools or shares tips, charges automatic gratuities, or receives a tip-out “to the house”, this article could save you thousands of dollars.
If you’re like most restaurateurs, you probably think that the Canada Revenue Agency’s only concern about tips and gratuities is that servers report them on their personal income tax returns. While the CRA is concerned about this, now, they are even more interested in restaurants that fail to report certain types of tips.
The CRA’s policy on tips and gratuities can be found here. The rest of this article may shock you.
Continue reading “Tips on Tipping Policies”
I’m certainly not saying that all, or even a significant number, of CRA’s tax auditors are corrupt, but this story in the Montreal Gazette highlights some very interesting issues surrounding restaurant tax audits.
The corrupt tax auditors seemed to focus on restaurants, knowing that they could “justify” large reassessments, unless the owners paid them bribes. In at least one case, the auditor asked for the bribe before auditing the restaurant! Finally, the auditors could just as easily make a restaurant appear to be reporting all of its income as it could make it look like they were evading large amounts of tax.
An RCMP investigation of Canada Revenue Agency employees has resulted in three former auditors being accused of shaking down restaurant owners for cash.
Continue reading “CRA Auditors Charged”
There are about 80,800 restaurants in Canada (CRFA), and about half are audited every four years. That’s a lot of restaurants being audited, and you just know that the majority of them receive reassessments at the end of each audit.
Rather interestingly, there are only about 10 significant court cases involving restaurants that had been audited using the mark-up method. How can this be?
Continue reading “Why Aren’t There More Court Cases?”
While this story originates in the United States, it is just as applicable here, in Canada.
Reuters’ David Cay Johnston noted today that IRS auditors “assigned to the 14,000 or so largest corporations found $9,354 of additional tax owed for every hour spent testing tax returns in the 2009 fiscal year.” [bold italics are mine]
A few things to note.
Continue reading “Highly Profitable Tax Auditors”