Friday, 3 October 2014
Tipping for Services
Do You Pay GST on the Tip Received?
What happens when a customer pays a tip?
Does the business owner have to pay GST to the ATO?
Does it get reported on the BAS?
What happens with tipping depends on how the customer is tipped and how the entity passes that tip on (If they do!)
Employees receiving tips directly from a customer or from the employer must report the tips as income.
It is important to keep records that show how much of the tips received have been passed onto the employees, and if any of the tips have been kept by the owner as part of the business income.
Processing tips from a Z-Read or POS Summary sheet, it’s important to separate the tips in the accounting process.
For further information:
ATO Reference to Tips and Gratuities
ATO Law Reference – GST and Restaurant Tips