waiters tips - Do I have to declare

deemy

HI.
Just wondering does anyone know if u have to declare tips tht u are getting from a waiters job. Probably do but does anyone know how much u can receive before i would have to declare it. Went back to work about a month ago after 15mts unemployed whereby we learned to live on peanuts so at the moment tbh my tips are going a long way to day to day living costs ie food petrol. dp is self employed so just afraid if there was an audit on his books they would wonder what the hell we are living on.
Any info would be greatfully appreciated
Tanx in advance

the_syco

Hrm. Don't know, but would tips be considered "gift for work done", as opposed to "payment for work done"?

Legend100

tips are specifically disallowed as gifts, they are a taxble form of income and should be declared but as you can guess, not many people do

Snowdrop

Tips received directly from customers are not taxable. Revenue's position is as follows:
http://www.revenue.ie/en/tax/it/leaflets/benefit-in-kind/application-payeprsi.html#misc29
Where the tips are routed through the employer, PAYE/PRSI must be applied to the amount paid (including employer PRSI). If tips are received directly from patrons, there is no obligation on the employer to operate PAYE/PRSI on the amounts received. (The employees are obliged to declare the tips received in their annual return of income). In the case of credit card tips the employer must operate PAYE/PRSI on the amounts of the tips received.

AugustusMinimus

Snowdrop wrote: »

Tips received directly from customers are not taxable. Revenue's position is as follows:
http://www.revenue.ie/en/tax/it/leaflets/benefit-in-kind/application-payeprsi.html#misc29
Where the tips are routed through the employer, PAYE/PRSI must be applied to the amount paid (including employer PRSI). If tips are received directly from patrons, there is no obligation on the employer to operate PAYE/PRSI on the amounts received. (The employees are obliged to declare the tips received in their annual return of income). In the case of credit card tips the employer must operate PAYE/PRSI on the amounts of the tips received.

Case I or Case IV out of interest.

Snowdrop

At a guess. I would say it is case IV but I'm not 100% sure. If I ever have a client who wants to declare it to me I will check up on it.;)

deemy

so there is no cut off point whereby Iam allowed to earn up to a certain amount, then declare the rest. I dont know where I got that notion from:rolleyes:
Wat do u mean when ye are on about case 1 and case 4
tanx

AugustusMinimus

deemy wrote: »

so there is no cut off point whereby Iam allowed to earn up to a certain amount, then declare the rest. I dont know where I got that notion from:rolleyes:
Wat do u mean when ye are on about case 1 and case 4
tanx

Afraid not.

Just about where you'd put that income on an income tax return form.

stephendevlin

Cash isnt traceable!! Stick it in yer pocket an say nawt!

deemy

ah tanx.
stephan wish i could but just afraid of dp business would get an audit and they would wonder what he is living off:(
tanx all

dbran

stephendevlin wrote: »

Cash isnt traceable!! Stick it in yer pocket an say nawt!

Not very helpful advice.

Cash IS traceable because if you earn it you have to spend it somewhere. And if you spend it somewhere it is traceable.


Kind Regards

dbran

Henry McConville

deemy wrote: »

HI.
Just wondering does anyone know if u have to declare tips tht u are getting from a waiters job. Probably do but does anyone know how much u can receive before i would have to declare it. Went back to work about a month ago after 15mts unemployed whereby we learned to live on peanuts so at the moment tbh my tips are going a long way to day to day living costs ie food petrol. dp is self employed so just afraid if there was an audit on his books they would wonder what the hell we are living on.
Any info would be greatfully appreciated
Tanx in advance

Put all tips straight in your pocket and you will be fine!

nompere

Henry McConville wrote: »

Put all tips straight in your pocket and you will be fine!

This is very silly advice.

Revenue know that the OP works in a restaurant - and will find it all too easy to establish the restaurant's policy on tips and service charges.

Do bear in mind that if Revenue assess a person to tax - and they can use estimated figures - it is the taxpayer's job to prove that Revenue are wrong. Revenue only have to show that there were reasonable grounds for their assessment.

It is always open to Revenue to assess any taxpayer, even if all their income is charged to PAYE.

Henry McConville

nompere wrote: »

This is very silly advice.

Revenue know that the OP works in a restaurant - and will find it all too easy to establish the restaurant's policy on tips and service charges.

Do bear in mind that if Revenue assess a person to tax - and they can use estimated figures - it is the taxpayer's job to prove that Revenue are wrong. Revenue only have to show that there were reasonable grounds for their assessment.

It is always open to Revenue to assess any taxpayer, even if all their income is charged to PAYE.

It was said with a hint of sarcasm

But there is no way of the revenue tracking somebody's tips, so it's hardly worth declaring. Unless you signed an employment contract stating tips were part of your income, you have no need to declare...

Henry McConville

dbran wrote: »

Not very helpful advice.

Cash IS traceable because if you earn it you have to spend it somewhere. And if you spend it somewhere it is traceable.


Kind Regards

dbran

Explain how off the book tips could be traced?

dbran

Hi Henry

Hmmm putting me on the spot ehhh:)

It may be difficult to trace but that does not mean it is impossible.

I take your point regarding the level of income in undeclared tips and clearly it will be a matter for the revenue to decide whether or not it is profitable to persue the matter or not. In most cases it will not be.

Leaving that aside, as a previous poster mentioned the revenue can use estimates to establish whether or not to raise an assessment and it is up to the tax payer to disprove these estimates.

Also the revenue have various analytical tools such as REAP which basically contains all the information gathered from all the tax returns of every business in every sector in every town in the country. This is a very powerful tool. It is not unusual in large cases for them to sit in a restaurant a couple of days before the audit and watch how it operates. They are getting more and more clever unfortunately.

The revenue might say, for example, that for restaurants in your area that are including tips via the PAYE system, the average wages (including tips) is say 30% of turnover. You are not including tips through the payroll as you say your staff take tips directly from Patrons. The percentage of wages in your restaurant to turnover is only 20%. Therefore I estimate that there is tips being underdeclared by your staff of 10% of turnover. It will then be up to you (and your staff) to disprove the theory. That is where a good tax adviser would earn their corn.

As I said above whether they will find it profitable to go after each employee individually would be doubtful. A lot would depend on the number and identifyability of staff and the extent of the shortfall.

They might insist that tips are put through the payroll from now on. If the restaurant refuses they may threaten to or put it onto a higher risk cycle for audit and audit the restaurant every year. This would probably be the usual result.

Hope this helps

dbran

Mr. Incognito

I'm with the put it in your pocket.

Revenue's approach is that anything that can be traced, i.e credit card tips is taxed.

Anything that cannot, i.e cash is not taxable as it is too onerous on a PAYE worker to be filing Form 11's every year for petty cash. Revenue don't want the wasted time and neither do you.

Danniboo

That's laughable they'll be taking our blood and selling it next.

Henry McConville

dbran wrote: »

Hi Henry

Hmmm putting me on the spot ehhh:)

It may be difficult to trace but that does not mean it is impossible.

I take your point regarding the level of income in undeclared tips and clearly it will be a matter for the revenue to decide whether or not it is profitable to persue the matter or not. In most cases it will not be.

Leaving that aside, as a previous poster mentioned the revenue can use estimates to establish whether or not to raise an assessment and it is up to the tax payer to disprove these estimates.

Also the revenue have various analytical tools such as REAP which basically contains all the information gathered from all the tax returns of every business in every sector in every town in the country. This is a very powerful tool. It is not unusual in large cases for them to sit in a restaurant a couple of days before the audit and watch how it operates. They are getting more and more clever unfortunately.

The revenue might say, for example, that for restaurants in your area that are including tips via the PAYE system, the average wages (including tips) is say 30% of turnover. You are not including tips through the payroll as you say your staff take tips directly from Patrons. The percentage of wages in your restaurant to turnover is only 20%. Therefore I estimate that there is tips being underdeclared by your staff of 10% of turnover. It will then be up to you (and your staff) to disprove the theory. That is where a good tax adviser would earn their corn.

As I said above whether they will find it profitable to go after each employee individually would be doubtful. A lot would depend on the number and identifyability of staff and the extent of the shortfall.

They might insist that tips are put through the payroll from now on. If the restaurant refuses they may threaten to or put it onto a higher risk cycle for audit and audit the restaurant every year. This would probably be the usual result.

Hope this helps

dbran

Good response but I am still of the opinion that tips are virtually untraceable, short of the Garda Technical Bureau coming in and setting up a survelliance operation!

Shane732

dbran wrote: »

The revenue might say, for example, that for restaurants in your area that are including tips via the PAYE system, the average wages (including tips) is say 30% of turnover. You are not including tips through the payroll as you say your staff take tips directly from Patrons. The percentage of wages in your restaurant to turnover is only 20%. Therefore I estimate that there is tips being underdeclared by your staff of 10% of turnover. It will then be up to you (and your staff) to disprove the theory. That is where a good tax adviser would earn their corn.

Do you think this would stand up in front of the appeals commissioners?!