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GST/HST on Tips and Gratuities

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Sales Taxes  -> GST/HST -> GST or HST on Tips and Gratuities

GST or HST on Tips and Gratuities

Is GST or HST charged on tips and gratuities?  Not usually.  This is because a tip or gratuity is usually something added after the fact, an optional payment by the customer, and not recorded on the original bill.  Tips and gratuities are often given to servers in restaurants, hairdressers and barbers, and cab drivers.  Although the tip may be added to the bill by the customer, it is not part of the original bill, and is not subject to GST or HST.

Some establishments, such as restaurants, may add a mandatory or suggested gratuity as a service charge to the bill given to the customer.  This is often done when a large group is being served.  In this case, GST or HST must be charged on the total including the gratuity. However, there would be no GST/HST on any provincial liquor tax that is included on the bill.

Canada Revenue Agency (CRA) Resources

How to calculate the GST/HST - includes information on Tips and Gratuities

Revised: September 19, 2017

 

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