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Consumers may have many reasons to feel tip fatigue, from the high cost of living to the ubiquitous prompts.

But who loses out when we decide to tip less, or not at all? CTVNews.ca spoke with a few industry experts to find out how tipping works and who actually receives the money.

You may think your entire tip will go directly to your dine-in restaurant server, but sometimes that's not the case, Marc Mentzer, professor of human resources and organizational behaviour at the University of Saskatchewan, said in a phone interview with CTVNews.ca on Wednesday.

The restaurant may have a tip pooling arrangement, usually imposed by management, for instance. This happens when all servers' tips are pooled and each server gets a share, he explained.

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Another practice in Canada is tipping out, which is when restaurant management requires a certain amount of servers' tips to be shared with other employees who don't normally receive tips, commonly kitchen staff, Mentzer pointed out.

He estimates that a normal tip-out to other staff would be four to six per cent of each server's sales, or it could vary from restaurant to restaurant. However, he notes that the issue is very complicated and there is little reliable data on the tip-out percentage and tipping in general. Tipping out is widely accepted and customary in every province, except in Quebec, he added.

In some provinces, house tipping is legally permitted, which occurs when the manager or owner takes some of the tips as their personal income. He says some provinces permit house tipping if the manager is waiting on tables, while others have no limits on what proportion of the tips they can take.

It's less clear how much workers take from tips as it can vary from one company to another, industry experts say.

Keerthana Rang, spokesperson for Uber Canada, says Uber Eats delivery people and Uber drivers take home 100 per cent of all tips.

"Uber takes zero fees on tips," she said in an email to CTVNews.ca on Wednesday.

Types of tipping

Jocelyn Rhindress, senior manager of national and Atlantic business resources with the Canadian Federation of Independent Business, says two types of tipping exist in Canada from the perspective of the Canada Revenue Agency (CRA).

Most tips will be considered controlled tipping, said Rhindress, who is based in Moncton, N.B. Controlled tips are those that the employer controls and distributes to employees, according to the CRA.

"So any money that comes through and gets a touch point from the employer is considered a controlled tip," she said in a video interview with CTVNews.ca on Wednesday. Controlled tipping includes money that comes through debit machines, pooled tips, or even when the server gives cash to the employer that later gets distributed to their pay, she added.

Employees must pay Canada Pension Plan (CPP) or Québec Pension Plan (QPP) contributions, as well as Employment Insurance (EI) premiums, on controlled tips since they are part of the employee's compensation, according to the CRA.

The second type of tipping is direct tipping, which is any instance when the employer doesn't deal with the tip, such as customers paying workers directly with cash. "The employer doesn't have any interaction with the tips (and) the employee has 100 per cent control over that portion of the money," she said.

Employees don't need to pay or EI premiums on direct tips.

However, Quebec employees of regulated workplaces must declare all their tips to their employer and make QPP and EI payments, the CRA said.

All types of (controlled and direct) must be declared as income to the CRA.

Under Canadian law, employers can only take out money from tips if there are court orders and statutory deductions, Rhindress pointed out. Court orders may happen when an employee owes money to the employer or someone else that may prompt the court to make the employer deduct from the employee's tips.

Mike von Massow, food economist and professor at the University of Guelph, says tipping is not the law or rule – it's a social norm.

"I think it's always a good idea to ask who's getting the tip to make sure that the people that you think are, if you think they need it, that they are getting it," he said in a video interview with CTVNews.ca on Wednesday. "In the current environment, if you don't tip, it generally comes out of the pocket of the person who is serving you."

It's up to the customer to decide if and how much they want to tip, Rhindress adds.

"Ultimately, who and how much anyone tips should remain … the responsibility of the consumer," Rhindress said. "The consumer should have control over who and how much and when they tip."