Tips are taxable income, even when they come from gambling winnings
Gambling winnings in Canada are tax-free. Employees’ tips and gratuities are taxable. But what if you work in the gaming industry and a casino patron tips you after hitting the jackpot at the slots?
The Tax Court addressed that issue in a decision released last week involving a slot attendant at the Grand Villa Casino in Burnaby, B.C., who was reassessed by the Canada Revenue Agency for failing to report nearly $24,000 (in 2011) and $39,000 (in 2012) of tips as taxable income on his returns. He was also slapped with gross negligence penalties of $3,059 (2011) and $5,352 (2012) for omitting these tips from his income.
Prior to joining the casino in 1999, the taxpayer was a full-time financial adviser who sold mutual funds and life insurance. Once he began working at the casino, he transitioned to part-time advisory work.
His slot attendant duties included servicing the slot machines, contacting the appropriate casino employees when a patron won and wanted to cash out, showing guests how to use the machines when necessary, and “generally maintaining a friendly, positive attitude in interacting with casino patrons.” The taxpayer was paid an annual salary by the casino of $27,000 in 2011 and $29,000 in 2012.