--- title: "Do Servers Pay Tax on Tips in Canada?" description: "Yes. The CRA says all tips are taxable income you must report. Tips your employer controls go on your T4; tips paid to you directly, you track and report." url: https://www.tipmaxapp.com/ca/answers/canada-tips-and-tax language: en publisher: TipMax (Entermaurs Incorporated) date_published: 2026-09-23 last_verified: 2026-09-23 --- # Do servers pay tax on tips in Canada? **Short answer:** **Yes.** The CRA says all tips and gratuities are taxable income and must be reported on your return. How they get there depends on who controls them. Tips your employer controls, like an employer-run pool or a service charge, go on your T4 with tax, CPP and EI taken off. Tips customers pay to you directly aren’t on your T4. You track those yourself and report the total. ## Example math You wait tables. Here’s one year of tips, split the way the CRA splits them (amounts illustrative): | | Controlled tips | Direct tips | | --- | --- | --- | | Example | Your employer’s tip-sharing formula pays you $6,000 | Cash left on your tables: $9,000 | | On your T4? | Yes, in box 14 (employment income) | No | | Tax, CPP and EI taken off your pay? | Yes | No | | Where it goes on your return | With your T4 employment income | As other employment income not on a T4 | | CPP | Deducted at source | Optional: you can elect to contribute with Form CPT20 | 1. All **$15,000** is taxable. The split only changes how each part reaches your return. 2. The **$6,000** is already on your T4. Don’t add it a second time as other employment income. 3. The **$9,000** is on you: add up your own record for January 1 to December 31 and report the total. **Not tax advice.** Amounts are made up for the example. If you work in Quebec, the provincial rules below apply as well. ## Plain English ### What the CRA says The CRA puts it plainly: “all tips and gratuities you receive are considered taxable income and must be reported on your income tax and benefit return.” That covers servers and bartenders, and it covers tips you get while self-employed. ### Controlled or direct: who holds the money The CRA sorts tips by whether your employer controls them. **Controlled tips** include a mandatory service charge or a percentage your employer adds to the bill, tips shared out by a formula your employer sets, and tips you hand over to your employer to distribute. Your employer withholds income tax, CPP and EI on these and puts them on your T4. **Direct tips** are paid to you by the customer, and your employer has no control over the amount or who gets it. Cash left on the table counts. So does a pool that the staff, not the employer, decide how to share. So do card tips your employer pays out to you in cash at the end of the shift. Nothing is withheld on direct tips and they aren’t on your T4. You can get both kinds at the same job. Only the controlled tips count as pensionable and insurable earnings for CPP and EI. On direct tips you can choose to pay CPP by filing Form CPT20 with your return, which the CRA notes can raise the pension you collect later. ### Tracking your direct tips For direct tips, the CRA lists your steps: keep track of your tips through the year, keep a copy of your tracking document, add up January 1 to December 31, and report the total as other employment income. If you’re self-employed, the total goes on Form T2125 instead. The CRA also lists reasons reporting helps you: lenders see your full income when you apply for a loan or mortgage, your RRSP contribution room is higher, and you can pay into CPP or QPP. If the CRA reassesses you and finds tips you didn’t declare, you pay what you owe plus interest and possibly penalties. The Voluntary Disclosures Program lets you correct a past return. ### In Quebec: declaring tips to your employer Quebec adds its own rules through Revenu Québec. If you work in a regulated establishment, you must report your tips in writing to your employer at the end of every pay period. In a non-regulated establishment you don’t report them to your employer, but tips that aren’t on your RL-1 slip still go on your Quebec return. If your reported tips are less than 8% of your tippable sales, your employer must allocate the difference to you. At year end your RL-1 slip includes your tips. Revenu Québec says declared tips raise your vacation, statutory holiday and family-event pay, and tips other than allocated ones count toward Employment Insurance and Québec parental insurance plan benefits. On the federal side, the CRA says employers withhold income tax and EI on declared tips, but not CPP. Revenu Québec also says tips are the exclusive property of the employee who receives them, and your employer can’t require you to pay credit card fees. ## Common mistakes - Leaving cash tips off your return because they aren’t on your T4. - Adding tips that are already in box 14 of your T4 a second time as other employment income. - Rebuilding a year of direct tips from memory at tax time instead of tracking them as you go. - Assuming every tip pool is taxed the same way. A pool your employer runs by its own formula is controlled; one the staff decide on is direct. ## Official sources - [CRA: Are you aware that all your tips and gratuities are taxable?](https://www.canada.ca/en/revenue-agency/campaigns/track-report-tips-gratuities/tips-gratuities-taxable.html) - [CRA: Track and report your tips and gratuities](https://www.canada.ca/en/revenue-agency/campaigns/track-report-tips-gratuities.html) - [CRA: Tips received by employees (payroll)](https://www.canada.ca/en/revenue-agency/services/tax/businesses/topics/payroll/calculating-deductions/determining-tax-treatment/tips.html) - [CRA: Tips and gratuities (CPP and EI explained)](https://www.canada.ca/en/revenue-agency/services/tax/canada-pension-plan-cpp-employment-insurance-ei-rulings/cpp-ei-explained/tips-gratuities.html) - [CRA: Other employment income](https://www.canada.ca/en/revenue-agency/services/tax/individuals/topics/about-your-tax-return/tax-return/completing-a-tax-return/personal-income/line-10400-other-employment-income.html) - [Revenu Québec: Employees who receive tips, benefits and obligations](https://www.revenuquebec.ca/en/citizens/your-situation/employees-who-receive-tips-benefits-and-obligations/) ## Last verified September 23, 2026. Checked the CRA tips campaign pages, the CRA payroll page on tips received by employees, the CRA CPP and EI article on tips, the CRA page on other employment income, and Revenu Québec’s page for employees who receive tips. **Still open:** Revenu Québec’s page names its tip register form in two different ways, so this page doesn’t cite a form number. Check the form with Revenu Québec or your employer. ## Related - [How do I keep track of my tips?](https://www.tipmaxapp.com/us/answers/how-to-keep-track-of-tips) - [How do I keep a record of my tip-outs?](https://www.tipmaxapp.com/us/answers/how-to-record-tip-outs) - [What is a tip-out?](https://www.tipmaxapp.com/us/answers/what-is-a-tip-out) ## How TipMax helps with this For direct tips, the CRA tells you to keep track through the year, “on a calendar, a mobile app or in an agenda,” and to keep a copy of your tracking document. TipMax is an iPhone app for servers and bartenders that tracks tips and tip-outs and turns a restaurant menu into study flashcards. - Log cash and card tips per shift in seconds. - Weekly, monthly, and pay-period totals. - Download all your data as a CSV any time. Download TipMax free: https://apps.apple.com/us/app/tipmax-study-track-earn/id6744850146 --- TipMax Answers explains public government guidance on pay and workplace rules in plain English for tipped workers. It is **not legal, tax, or accounting advice**. Rules change and local rules can add to them. Confirm with the agency linked on this page or a qualified professional. TipMax the app helps you track tips and pay; it doesn’t enforce wage law or decide disputes.