A restaurant mishandled tip remittances and source deductions. We corrected the payroll treatment and avoided escalating CRA penalties.
A busy restaurant treated controlled tips inconsistently and fell behind on source-deduction remittances, exposing the directors to personal liability. We corrected the tip and payroll treatment, caught up the remittances, and set up a compliant weekly process. Prompt disclosure and correction kept penalties to a minimum.
Hospitality files are examined for tip reporting and food cost ratios benchmarked against sector norms.
Employers withhold CPP, EI and income tax and remit on a schedule set by their average monthly withholding. Late remittance carries a penalty of 3% to 10%, rising to 20% for a repeat failure with gross negligence in the same year.
Why it bites: Payroll penalties compound quietly. An employer that drifts one cycle late each quarter can owe more in penalties than in the tax it was late paying.
Source deductions are held in trust for the Crown from the moment they are withheld, which is why directors can be personally liable for unremitted amounts under section 227.1.
Why it bites: Unlike most corporate debts, this one can follow the directors personally after the company is gone.
A review is won on documentation created at the time, not on explanations offered afterwards. The CRA asks for the source records behind a figure, and an unsupported claim is simply disallowed.
Why it bites: Most reassessments we reverse are not the result of a wrong position — they are the result of a correct position with no contemporaneous paper trail behind it.
Every engagement above was priced as a fixed fee agreed before the work started, and paid only once the client had reviewed the result. If any of this looks like your situation, the first step is a free 15-minute call — we will tell you plainly whether there is anything worth doing.
Reviewed for the 2025 tax year by Udit Gupta, Certified Tax Accountant. Figures describe a real engagement; outcomes depend on your own facts. Client details are omitted for confidentiality.
