Court rules employers must include electronic tips under pensionable earnings

By Julius Melnitzer | September 21, 2022

The Federal Court of Appeal has ruled that a Halifax restaurant must include a portion of the electronic gratuities intended for wait staff as “pensionable salary and wages” when calculating its liabilities under the Canada Pension Plan.

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The Federal Court of Appeal has ruled that a Halifax restaurant must include a portion of the electronic gratuities intended for wait staff as “pensionable salary and wages” when calculating its liabilities under the Canada Pension Plan.

This was despite the fact the restaurant had no obligation to include gratuities paid in cash directly to wait staff, who were free to keep the tips without advising their employer.

Brian Casey, counsel in BoyneClarke LLP’s business and criminal litigation teams, who represented Ristorante a Mano Ltd., says treating electronic payments differently from cash is “odd” in today’s society. “The foundational jurisprudence on which the court relied comes from an era when most people paid for things in cash.”

But David Rotfleisch, founder of tax boutique Rotfleisch & Samulovitch Professional Corp., who wasn’t involved in the case, says the wording of the governing legislation may have left the court with no choice but to reach the conclusion it did. “The legislation is drafted overly broadly, so the decision may be technically correct, however absurd the result. And the government has no intention of amending the law because it would decrease tax revenues.”

Read more here . . .

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