I-3 - Taxation Act

Section 42.12 Disposition versions

2006-03-01

42.12. Section 42.11 does not apply to an individual in relation to employment duties performed by the individual for a regulated establishment where all or substantially all of the tips the individual receives or benefits from in the performance of employment duties are derived from service charges paid by the customers of the regulated establishment and where

(a)  the service charges required from the customer in respect of a tippable sale are, in all or substantially all cases, equal to at least 10% of the amount of the tippable sale;

(b)  the customers are informed of the mandatory nature of the service charges and of the percentage charged in relation to the amount of tippable sales; and

(c)  the tip-sharing arrangement, if any, is not managed by the employees.

In addition, section 42.11 does not apply, for a pay period, to an individual in relation to employment duties as a cloakroom attendant performed for a regulated establishment or to an individual in relation to employment duties performed for a regulated establishment where

(a)  all or substantially all of the tips the individual receives or benefits from during the pay period are derived from a redistribution of tips received or benefited from by other individuals;

(b)  the individual is an employee of a corporation that operates the regulated establishment and the shares of the capital stock of which carrying voting rights in all circumstances are more than 40% held, at the end of the pay period, by the individual or the individual’s spouse;

(c)  the individual is an employee of a partnership that operates the regulated establishment, the individual’s spouse is a member of the partnership at the end of the pay period, and the spouse’s share, at that time, of the income of the partnership would be equal to more than 40% of the income of the partnership if the partnership’s fiscal period ended at that time and the partnership’s income for that fiscal period were equal to $1,000,000; or

(d)  the individual is an employee of the individual’s spouse.

1997, c. 85, s. 44; 2004, c. 21, s. 45.