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I started writing this blog in September, 2009.  At that time, there was very little useful information about restaurant tax audits in Canada (or anywhere).  In the 42 articles that I have written so far, I have tried to fill this gap with practical information geared towards restaurateurs.  Based on the comments I’ve received from a number of readers, I think I have succeeded.  There still isn’t much useful information about restaurant tax audits, other than what you will find in this blog.  That’s a shame, but it keeps me motivated to continue helping as many restaurateurs as I can.

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It was kind of fun trying to come up with a decent headline for today’s article.  Tips are in the news a lot, lately.  Servers, and others who receive tips, don’t like handing out a portion of their tips to other co-workers and especially not to the “house” (management).  Now, we find that they don’t like “tipping out” to the big house, either!  It’s not like we didn’t know this, but apparently, the CRA is just starting to take notice!

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A few months ago, Dining Date Night began offering customers a 30% discount at various restaurants in Toronto.  In order to get the discount, a customer books a reservation on a website and pays a $10 fee to Dining Date Night.  When the customer visits the restaurant, 30% of the total bill (before taxes) is deducted as a discount.  This type of promotion is relatively good for both the consumer and the restaurant that provides the discount, because the restaurant can restrict the hours when reservations may be taken.

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I’ve written a couple of articles about Groupon on my sister blog, Canadian Restaurateur.  This is part of a series that will cover accounting for Groupon certificates, setting up your Point of Sale (POS) system to properly track coupons and discounts, using QuickBooks to enter Groupon transactions, examining the tax treatment of Groupon certificates (this one), and finally, determining whether your restaurant should consider Groupon.

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I had an interesting conversation with a restaurant owner the other day.  We were discussing tax audits and he mentioned that he wasn’t worried, because his accountant had signed off on his financial statements.  He thought that his accountant was responsible for paying any additional tax that might be reassessed by the CRA!

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Many restaurant owners use their automobiles for picking up supplies for the business, researching other restaurants, and making trips related to the restaurant’s operations.  In Canada, individuals are able to claim a reasonable portion of their automobile expenses against their employment income from the business.  Even if you don’t draw a salary, you’re still considered an employee, by being a director of the company.

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If  your restaurant pools or shares tips, charges automatic gratuities, or receives a tip-out “to the house”, this article could save you thousands of dollars.

If you’re like most restaurateurs, you probably think that the Canada Revenue Agency’s only concern about tips and gratuities is that servers report them on their personal income tax returns.  While the CRA is concerned about this, now, they are even more interested in restaurants that fail to report certain types of tips.

The CRA’s policy on tips and gratuities can be found here.  The rest of this article may shock you.

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