Many jobs give you the opportunity to collect tips such as wait staff, food delivery, parking attendance, etc. Some wonder why should I claim this extra income? Besides the fact that CRA does random assessments on your reported income and are expecting you to report your tips if you work in certain jobs, there are some benefits of reporting this extra income.
If you are interested to save for your retirement, then you should consider the Registered Retirement Saving Plan (RRSP). There is a limit of how much you can contribute to your RRSP every year depending on your income reported the previous year. The more you earn, the faster your contribution room grows. Even if you don’t plan to save money this year, growing your room limit at a young age will allow you to save a big lump sum in the future.
As soon as you start earning income, no matter the age, you are encouraged to file a tax return to build your RRSP room.
Canada Workers Benefit
CWB is a refundable tax credit that is given to workers who are in a lower income bracket but no less than $3,000 in earned income. The amount of credit paid is based on your income. The least amount of credit is given to individuals who earn the minimum income limit or the maximum income limit. So if your salary is not enough to apply, the extra tip income will increase, hence allowing you to claim the benefit.
If you have a disability that is approved by the CRA, you can claim the disability supplement. If you are married or in a common-law relationship, your maximum income limit will increase since the family expenses increase.
All in all, claiming the extra tips will open up certain benefits that you would not have been allocated without the extra earned income. It’s a win-win situation!
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