1410109 Ontario Ltd. v. The King
Interesting court case where a banquet hall based in Ontario was found to be liable for HST on mandatory 15% gratuities.
Typically, gratuities are voluntarily given by the patrons to the servers and staff. Therefore, gratuities do not form part of taxable supplies and related services; and consequently, are not taxable for GST/HST purposes.
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Court found that due to the mandatory nature of the gratuity, it formed a part of the taxable supplies and related services. Therefore, the mandatory gratuity was taxable. Here is the full case.
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Restaurant, banquet hall, and catering businesses should be aware of this court case; will likely need to collect GST on mandatory gratuities.
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