A surge of tax audits of staff at a prominent Prince Edward Island hospitality group illustrates the growing efficiency of the Canada Revenue Agency’s tools for tackling formerly hard-to-pin down tip income and the growing risk to those who don’t declare it.
Dozens of staff at PEI’s Murphy Hospitality Group – possibly as many as 200, management says – received letters from the Canada Revenue Agency in January, accusing them of low-balling the gratuities they earned in 2014 and 2015. The agency is claiming some individuals failed to declare as much as tens of thousands of dollars – and is asking for back taxes on it, with potential further financial penalties of up to half of what’s owed. A number of service staff reached out to The Globe and Mail to signal their frustration with what they believe was a sudden shift in the CRA’s enforcement tactics.
Canada’s tax-collection agency insists it’s simply making sure all Canadians pay their fair share of taxes. The Murphy Hospitality Group staff’s stress, though, is amplified by the chain’s dominance in the small province – and it draws attention to the changing ways in which service-industry workers’ tips can be accounted for, and in turn how much effort they must now put into determining their real income.