Ontario Ministry of Labour: Tips and Gratuities New Rules

Starting June 10, 2016, it will be illegal for employers to keep a portion of employees’ tips and other gratuities, except as permitted by the Employment Standards Act, 2000 (ESA).

These rules affect employers and employees covered by the ESA in workplaces where tips and gratuities are received – such as at bars, restaurants, hair and nail salons, catering firms and taxis.

The changes come as a result of Bill 12 Protecting Employees’ Tips Act, 2014.

What are considered tips and gratuities?

Tips and gratuities include money voluntarily given by a customer for customer service. It could be given to the employee directly, like money left on a table or bar for a server. Or it could be given to the employee indirectly, like a tip paid using electronic payment like debit or credit, or in a tip jar.

Tips and gratuities can also include any service charges imposed by an employer on a customer that the customer intends or assumes would be given to employees (e.g., banquet hall service fees, catering service fees, group table service charges).

What will be prohibited?

Employers will be prohibited from withholding, making deductions from or causing the employee to return tips and other gratuities. There are two situations in which this prohibition does not apply:

  • If the employer collects and redistributes the money among its employees, a practice often referred to as “tip pooling.”
  • If a statute or a court order authorizes it.

Employers can’t make deductions from tips for things like faulty work, cash shortages, or lost or stolen goods.

Employers will generally be prohibited from sharing in a tip pool. The exception is if the employer owns all or part of the business, and he or she regularly performs the same work to a large degree of:

  • Some or all of the employees who share in the tip pool, or
  • Those in the same industry who would normally receive tips.

For example, this exception would apply if a restaurant owner spent a substantial amount of his or her time serving food or in the kitchen doing the same work as staff members who receive a portion of a tip pool. The same standard applies to directors and shareholders of corporations.

The ministry is currently seeking input on a proposal to exclude credit card processing fees from tips.


(From the Ministry of Labour Website, issued: March 29, 2016)

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The CRA’s annual Office Audit Letter Campaign

 The CRA’s annual Office Audit Letter Campaign

The Canada Revenue Agency (CRA) will soon be conducting its seventh annual Office Audit Letter Campaign.

The letter writing campaign is designed to facilitate behavioural changes among a selected taxpayer population by providing the selected population with relevant information in order to improve their understanding of their current or past reporting requirements and guidance on how to correct any common errors.

In January 2016, the CRA will send approximately 30,000 “intent-to-audit” letters to selected groups of individual taxpayers and business owners who claim consecutive business or rental losses or who are employees claiming employment expenses on line 229 of their tax return. The objective of the campaign is to encourage letter recipients to review and where applicable correct their tax affairs by accessing their account on-line through My Account, submitting in paper format any required changes using Form T1-ADJ – T1 Adjustment Request, or through the Voluntary Disclosures Program. 

CRA’s emphasis is on helping individuals and small businesses better understand their tax obligations, which in turn increases future voluntary compliance, protects the government’s tax base, and utilizes resources within the CRA more effectively.

If you or your clients have questions about the CRA’s Office Audit Letter Campaign or need help making changes to previously filed returns, go to www.cra.gc.ca/lettercampaign. You can also call the individual income tax enquiries line at 1-800-959-8281 or the business enquiries line at 1-800-959-5525.

 (From the CRA website)

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Ontario Has Changed Its Minimum Wage Rates

Minimum Wage Rates


Minimum Wage Rates
Minimum Wage Rate Wage Rates Prior to June 1, 2014 Wage rates from
June 1, 2014 – September 30, 2015
Current Rates: Rates as of October 1, 2015
General Minimum Wage $10.25
per hour
per hour
per hour
Student Minimum Wage $9.60
per hour
per hour
per hour
Liquor Servers Minimum Wage $8.90
per hour
per hour
per hour
Hunting and Fishing Guides Minimum Wage $51.25


Rate for working less than five consecutive hours in a day
Rate for working five or more hours in a day whether or not the hours are consecutive
Rate for working less than five consecutive hours in a day
Rate for working five or more hours in a day whether or not the hours are consecutive
Homeworkers Wage $11.28
per hour
per hour
per hour


General minimum wage – This rate applies to most employees.


Notes and definitions


Student minimum wage – This rate applies to students under the age of 18 who work 28 hours a week or less when school is in session, or work during a school break or summer holidays.

Liquor servers minimum wage – This hourly rate applies to employees who serve liquor directly to customers or guests in licensed premises as a regular part of their work. “Licensed premises” are businesses for which a license or permit has been issued under the Liquor Licence Act.

Hunting and fishing guides minimum wage – The minimum wage for hunting and fishing guides is based on blocks of time instead of by the hour. They get a minimum amount for working less than five consecutive hours in a day, and a different amount for working five hours or more in a day–whether or not the hours are consecutive.

Homeworkers minimum wage – Homeworkers are employees who do paid work in their own homes. For example, they may sew clothes for a clothing manufacturer, answer telephone calls for a call centre, or write software for a high-tech company. Note that students of any age (including students under the age of 18 years) who are employed as homeworkers must be paid the homeworker’s minimum wage.


(from information posted by the Ministry of Labour on their website)

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Do I have to charge HST on tips on services? What about CPP, EI and Income Tax?

Canada Revenue Agency informs that:

“Tips or service charges are not usually added to a bill. In general, consumers tip acalifornia-tips-and-gratuity-law.jpg percentage of the amount of a bill to service providers such as to waiters, waitresses, barbers, hairdressers, and taxi drivers. The percentage and whether the tip is calculated on the amount of the bill before or after taxes depends on the practice of the particular consumer.”

“A tip or gratuity that is freely given by a customer, for example, cash not recorded on a bill, is not subject to the GST/HST. However, if you add a mandatory or a suggested amount to the customer’s bill as a service charge, you have to charge GST/HST on that amount.”

However, are tips subjected to source deductions?

“Gratuities or tips received by employees are income earned in respect of employment for purposes of the Income Tax Act. However, it must be determined whether tips received in the course of employment are considered pensionable earnings under the CPP and/or are insurable earnings under the EIA. This answer depends on whether the tips are considered to have been paid by the employer (controlled tips), whether they are considered to have been paid by the client (direct tips) or whether they are declared tips in the province of Quebec.”

Controlled tips are gratuities that are controlled by the employer. Since they are controlled by the employer, the employer is considered to have paid these amounts to the employee.  Are tips and gratuities out of control and hurting chartering? Tips ...An example of controlled tips is (among other situations) when the employer adds a mandatory service charge to a client’s bill to cover tips. Controlled tips form part of the employee’s total remuneration and are subject to CPP contributions and EI premiums being deducted at source, provided that this person is employed in pensionable and/or insurable employment.

Direct tips are gratuities that are paid directly by the client to the employee and that are not subject to any of the forms of control by the employer as mentioned above under the heading controlled tips. A typical situation (among others) is when a client leaves money on the table at the end of the meal and the server keeps the whole amount.

Direct tips are considered to have been paid by the client and not the employer. In these situations, the employer is merely a conduit for the tip from the client to the worker; thus, direct tips are not subject to CPP contributions and/or EI premiums, BUT they are taxable income..However, an employee can elect to make CPP contributions on tip amounts earned in the course of pensionable employment where the tip income is found not to be subject to CPP contributions at source.

Declared tips (currently a situation applicable to the Province of Quebec) are the amount of tips that provincial law requires an employee to declare to his or her employer along with their controlled tips. In the province of Quebec, the Taxation Act provides specific guidance for employers in the hospitality sector whose employees carry out their duties in a regulated establishment. Employees working in a regulated establishment in the province of Quebec must declare their direct tips to their employer. For the purposes of the EIA, employees in the province of Quebec working in a regulated establishment will have the amount of their declared tips included in their insurable earnings along with their controlled tips. Currently, Quebec is the only province that has tax legislation requiring employees to declare their tips to their employer.

(Adapted from appropriate topics from the CRA website)

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Canada Revenue Agency: Manage Online Mail – New Service

Commencing February 9, 2015, a new service called Manage Online Mail is being offered by the Canada Revenue Agency (CRA) to electronically deliver mail to Canadians. Online mail is the best way to manage your correspondence from the CRA.

This service will provide you with:

·         quick and convenient online access to notices (notices of assessment and reassessment) and;

·         online access to future eligible correspondence as more becomes available electronically.

With your consent, tax preparers who EFILE your Individual Income Tax and Benefit return can assist you with the registration for online mail. Once you are signed up for online mail, you will receive an email confirming your registration. Eligible notices will no longer be printed and mailed to you. Instead, an email notification will be sent to your personal email address when new mail is available to view online. Similar to the system employed by banks, no sensitive or confidential information is sent to you by email, nor do we request to receive such information from you through email. Rather, once your mail is available online, you are asked to log in to My Account, a secure CRA online service, to view and, if required, print it.


  1. If you are interested in this service, your tax preparer can register you for online mail. A new field has been added on the T1 Return and T183 Form to include your personal email address.

·         Provide your personal email address to your tax preparer.

Each year you sign a T183 Form which authorizes your representative to EFILE your return. By providing your email address, you are giving your tax preparer consent to sign you up for online mail.

·         Your tax preparer will then enter and submit your personal email address to the CRA when filing your tax return.

  1. You can also register directly online with My Account, a secure CRA online service, at www.cra.gc.ca/myaccount.

 Viewing Your Online Mail

  My Account is the only place to view your online mail. To view your online mail;

·         Register for / log in to My Account at www.cra.gc.ca/myaccount.

·         Access notices of assessment or reassessment (and future items) from the “Welcome Page”. On that page, you can view and print correspondence items.

·         Select “Manage online mail”, to update an email address or cancel online mail.

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New to bookkeeping and accounting? A look at what the profession should do for you

Bookkeeping is the recording of financial transactions. Transactions include sales, purchases, income, receipts and payments by an individual or organization. Bookkeeping is usually performed by a bookkeeper. Bookkeeping should not be confused with accounting. The accounting process is usually performed by an th071PS2FNaccountant. The accountant creates reports from the recorded financial transactions recorded by the bookkeeper and files forms with government agencies. There are some common methods of bookkeeping such as the single-entry bookkeeping system and the double-entry bookkeeping system. But while these systems may be seen as “real” bookkeeping, any process that involves the recording of financial transactions is a bookkeeping process.

A bookkeeper also known as an accounting clerk or accounting technician, is a person who records the day-to-day financial transactions of an organization. A bookkeeper is usually responsible for writing the “daybooks.” The daybooks consist of purchases, sales, receipts, and payments. The bookkeeper is responsible for ensuring all transactions are recorded in the correct day book, suppliers ledger, customer ledger and general ledger.

As you can see, bookkeeping and accounting tasks are not easy. They bring a lot of responsibility with them. A bookkeeper and an accountant are responsible for every data they enter. They are the ones who will be responsible if some of the data is not true or there has been a mistake.  Bookkeepers and accountants are one of the most important partners who can give you valuable information about every process that is going on in the firm. Thus, due to the importance, sensitivity and skills required to perform these task, professionals should entrusted with your accounting. They should also understand your needs and goals. At Bright New World, we pride on gearing our services to your business’ uniqueness and will be happy to show you so.

(Click here to go back to Accounting Services page)

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Ontario Provincial Stat Holidays

General holidays, also referred to as statutory or “stat” holidays, are federally or provincially legislated holidays where employees in Ontario receive a day off, a day off with pay or compensation in lieu of time off.thTGSFCSG8

However, Civic Holiday* in Canada is not a statutory holiday; thus, it is not subjected to Holiday Pay, but often an accepted day off from work. A bill has been attempted to be passed in the house of commons but it has always been unsuccessful. If an employer wants you to work, it is a regular work day.


January 1 – New Year’s Day

February 17 – Family Day

April 18 – Good Friday

May 19 – Victoria Day

July 1 – Canada Day

August 4 – Civic Holiday*

September 1 – Labour Day

October 13 – Thanksgiving Day

December 25 – Christmas Day

December 26 – Boxing Day


January 1 – New Year’s Day

February 16 – Family Day

April 3 – Good Friday

May 18 – Victoria Day

July 1 – Canada Day

August 3 – Civic Holiday*

September 7 – Labour Day

October 12 – Thanksgiving Day

December 25 – Christmas Day

December 26 – Boxing Day


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How long do I keep my business and personal records?

The purpose of today’s note is to provide information to persons who are required by law to keep books and records in Canada.  A person in the context of this note includes, in addition to individuals, a corporation, a trust, and other organizations such as a registered charity, a registered Canadian amateur athletic association, and a non-profit organization.

Also, a record is described  by subsection 248(1) of the Income Tax Act to include an account, an agreement, a book, a chart or table, a diagram, a form, an image, an invoice, a letter, a map, a memorandum, a plan, a return, a statement, a telegram, a voucher, and any other thing containing information, whether written or in any other form.”   In order not to exclude any possible record, Canada Revenue Agency (CRA) does not specify the format of the source documents to be kept.  Rather, it describes, in general, their purpose; that is, to serve to substantiate and verify the information in the books thand records. Thus, a source document can take the form of items such as sales invoices, purchase invoices, cash register receipts, formal contracts, credit card receipts, delivery slips, deposit slips, work orders, dockets, cheques, bank statements, tax returns, and general correspondence whether written or in any other form.  CRA will also require other circumstantial supporting documents such as accountants working papers.

Generally, the books and records must be kept at the person’s place of business or residence in Canada and be available to officers of the CRA for audit purposes within and at all reasonable times. Books and records accessible electronically, but kept outside Canada do not conform to CRA requirements.  Moreover, acceptable electronic records means to be those which are electronically readable and useable in a format that CRA auditors can process using CRA equipment (i.e. a software present in the auditor’s CRA computer). If the records are to be kept electronically, the taxpayer must ensure to also keep adequate software to access and print the information.

Retention Period 

Current Income Tax Act regulations provides detailed times for specific retention periods for different sets of records.  However, general retention periods are as follow:

  • Under the Act, books, records, and their related accounts and source documents have to be kept for a minimum of six years from the end of the last tax year to which they relate. The tax year is the fiscal period for corporations and the calendar year for all other taxpayers.
  • Also for a corporation, two years from the date of the dissolution of the corporation (in the case of corporations that amalgamate or merge, books and records have to be retained on the basis that the new corporation is a continuation of each amalgamating corporation).
  • In the case of any non-incorporated business, six years from the end of the tax year in which the business ceased.
  • For the duplicate donation receipts of a registered charity or registered Canadian amateur athletic association, other than receipts for donations of property which are to be held for a period of not less than ten years, two years from the end of the calendar year in which the donations were made.
  • For other specified records of registered charities and registered Canadian amateur athletic associations, two years from the date the registration is revoked
  • For records relating to political contributions, two years from the end of the calendar year to which they relate.

Let me know whether this information is useful to you or if you have any questions.

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Personal Income Tax: First-time home buyers’ tax credit

If in 2013 you were a first time home buyer, read on.  If you already file your taxes and missed this credit up, it is not too late, you can still claim it. What is it, then?

old-project-with-tools-10058608If you are a first-time home buyer, you may be able to claim a non-refundable tax credit of up to $750 on the purchase of a qualifying home.  This is in addition to the Home Buyers’ Plan where you use RRSP’s to buy a home.

To qualify for the home buyer’s tax credit:

  • you or your spouse or common-law partner must have bought a qualifying home; and
  • you can’t have lived in another home owned by you or your spouse or common-law partner that year or in any of the four preceding years.

If you are buying a home and are eligible for the disability tax credit or if you are an individual buying a home for a related person who is eligible for the disability tax credit, you may also qualify for this credit even if you have already owned a home.

A qualifying home must be registered in your name, in your spouse’s or common-law partner’s name, or in both names, according to the applicable land registration system, and must be located in Canada. It includes existing homes such as single-family houses, semi-detached houses, townhouses, mobile homes, condominium units, apartments in duplexes, triplexes, fourplexes, or apartment buildings, and homes under construction.


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More advise from Business Owners from PROFIT Magazine (Part 2)

As promised, here is more food for thought.  These experiences and others are good advise that I use in financial-advisor-concept-100249768discussions with new clients, so think about what they mean to you and your prospective small business.

Be willing to commit everything to it. That could be family life, financial stability, emotional wellbeing, everything. You could be that rare person who is successful if you just give it a half effort, but if you want your organization to be successful, you have to put the organization first, for the first little while, anyway. —John Nalli, president and CEO, People Store Staffing Solutions (No. 29)

  • “Have a good home life. —Jonathan Finley, president and CEO, Credit Bureau of Canada Collections (No. 178)
  • “If you’re going to get into a partnership with someone, make sure they’re good people to partner with, that they’re complementary and they’re good to get along with. And make sure you have good agreements in place, just in case something goes wrong.” —Chris Rahbek-Nielsen, director, MAC Engineering Inc. (No.94)
  • “Burn the bridges and have no exit strategy. If you have an exit strategy, you’re going to use it. I’ve read almost all the business books, and everyone tells you that you need an exit strategy. But if you enter a marriage with an exit strategy, it won’t be good.” —Nik Grgic, president, FourQuest Energy Inc. (No. 1)
  • You have to remove any safety net; no working at a day job and doing it at night. We’ve found that it has to be all-encompassing to get going. You have to be walking the wire; you’re going to make it work or you’re not. Because if there is a safety net, more often than not you’re going to fall into it. It can be a little bit scary and daunting, but you have to have the right mindset: ‘This is it, I’m not trying it, I’m doing it. You have to realize that and believe it.” —Paul Herron, managing partner, Copperstone Connect (No. 38)


  • “Stick it out. Accolades are fake things. Screwing up is where you’ll learn. —Sean Dawson, president, Bluelime Enterprises Inc. (No. 78)
  • Know when to say no. It’s appealing to try and follow everyone who wants to work with you. But you can’t be all things to all people. Focus on your core offering.” —Jeremy Greven, founder and CEO, Prompt Alert Inc. (No. 55)
  • Hire people that are better than you, that are stronger than you and that compensate for (or complement) your weaknesses.” —Jeff Quipp, CEO, Search Engine People Inc.


  • Just start. The first iteration of your business is better than continuing to develop a business plan without testing it.” —Matthew Horne, founder, Deco Windshield Repair Inc. (No. 180)


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