re tax on waiters tips

saranas

hello everyone.quick question please if the tips are taxable in Ireland when someone leaves them on the credit or debit cards?if so whats the percentage?i cant find any info on it online.thanks.need to know if i am being screwed at work

Pro Hoc Vice

All income is liable to income tax, PRSI and income levy.

Marcusm

infosys wrote: »

All income is liable to income tax, PRSI and income levy.

Not all "income" is subject to PRSI but "reckonable earnings" from employments would be the relevant term here. It's not an academic point but a very technical area. The distribution if service charges between staff is definitely subject to PRSI (and PAYE etc) but tips given gratuitously and handled properly outside the control if the restaurant owner may never be the owner's property and thereby not in the scope if PRSI. It's a complex area subject to individual agreements and your union (if you have one) may (bizarrely) be best placed to provide you with info.

Pro Hoc Vice

Marcusm wrote: »

Not all "income" is subject to PRSI but "reckonable earnings" from employments would be the relevant term here. It's not an academic point but a very technical area. The distribution if service charges between staff is definitely subject to PRSI (and PAYE etc) but tips given gratuitously and handled properly outside the control if the restaurant owner may never be the owner's property and thereby not in the scope if PRSI. It's a complex area subject to individual agreements and your union (if you have one) may (bizarrely) be best placed to provide you with info.

I stand corrected.

Peregrinus

But the tips are liable to income tax, and this is true whether they are paid by credit card and distributed by the restaurateur, or paid in cash directly to the waiter. (Obviously, there's a practical difficulty with assessment and collection as regards cash tips paid to the individual, but they are in principle taxable income.)

Marcusm

Peregrinus wrote: »

But the tips are liable to income tax, and this is true whether they are paid by credit card and distributed by the restaurateur, or paid in cash directly to the waiter. (Obviously, there's a practical difficulty with assessment and collection as regards cash tips paid to the individual, but they are in principle taxable income.)

I don't disagree with this at all; in respect of the quantification matter, Revenue has always maintained information on average tip levels across different service industries (I remember different categories within hair dressing for example) to use as benchmark levels in the event they consider to be underdeclaration of income. Credit card/debit card tips will almost always fall under PAYE and PRSI because of the employer control. My earlier post was on the categorical nature of the prior response.

saranas

my owner says he pays around 24 percent tax on credit card tips.that sounds too much for me.

Peregrinus

saranas wrote: »

my owner says he pays around 24 percent tax on credit card tips.that sounds too much for me.

He doesn't pay any tax on c.c. tips; you do. Plus, you pay employee PRSI. He pays employer PRSI.

saranas

thanks for replies guys.all this is too complicated for me.just gonna leave it as it is.

gozunda

saranas wrote: »

thanks for replies guys.all this is too complicated for me.just gonna leave it as it is.

From citizens information website - gives simple explanation

http://www.citizensinformation.ie/en/employment/starting_work_and_changing_job/young_people_at_work/rights_of_young_workers.html

I am presuming the section on tips applies to all employees...


"If you are working in a job where staff are given tips/gratuities by customers (i.e, restaurants, bars, etc.) there is nothing in law to state you are automatically entitled to these tips. However, the law does not require you to hand these tips to your employer either. Instead, it all depends on the custom and practice in your workplace.
If all tips are collected by management and paid to staff through the payroll, then these tips are subject to tax in the normal way."