INSIDER Volume 11 - Issue 7 - April 5, 2011

On Monday March 28th the ORHMA, joined with twenty industry leaders ranging from Presidents, Owners and various Management within the Accommodations and Foodservice sectors, kicked-off a round table discussion at the Main Legislature Building with Minister of Economic Development Sandra Pupatello and senior government officials from seven ministries. The session was well received by government and ORHMA is looking forward to working with them in the process to reach a committed solution.

As previously announced the ORHMA was selected to represent the hospitality industry in the Ontario Government’s Open For Business Sector Strategy.  The ORHMA worked with members to identify some priorities to amend regulation or policy in order to reduce regulatory burden for hotels and restaurants. 

These issues pertain to:
1. Standardized Food Premise Inspection Reporting Programs
2. Standardized Food Handler Training & Certification Programs 
3. All-Inclusive Travel Packaging
4. Option to offer complimentary drinks.
5. Overall Inspections changed to a Compliance model(and not strictly enforcement)

The ORHMA recommendations were well received and a series of issue-specific negotiations will commence immediately between government officials and ORHMA and industry leaders.

On the same date, Tony Elenis President and CEO along with Michelle Saunders Manager of Government Relations were welcomed by Minister Pupatello at a private reception and invited to the Legislature House Galleries where the Minister read a statement regarding the planned achievements of the Open for Business Initiative.

Nick Perpick – Prime Restaurant Group, Stanley Goodman – Windermere House, Sandra Pupatello –
Minister of Economic Development, Tony Elenis – ORHMA President & CEO

» Canada Revenue Agency: Understanding Controlled Tips and Direct Tips
Special Article for ORHMA by James Rhodes LLB, BSc Associate with Miller Thomson

Recently the importance of restaurants understanding the difference between controlled tips and direct tips has become crucial.  In the past, the Canada Revenue Agency’s (“CRA”) typical audit of a restaurant did not involve a close look at how tips are paid to its employees.  It was mostly accepted that the T4 slips properly declared what wages were paid to the employees, and the employees were audited for whether they properly declared the tips they received.  However, recent audits by the CRA now indicate that this has changed.

In recent audits of major restaurants, the CRA has been looking at whether the tips received by the employees are considered controlled tips or direct tips.  There appear to be three reasons for this.  The first reason is that if the tips are found to be controlled tips, the restaurant is required to report the amounts paid to the employees on their T4 slips.  This will mean that the CRA will not have to worry about auditing the restaurant’s employees, as both their wage income and tip income will be reported on T4 slips filed with the CRA.

The second reason is that if the tips are found to be controlled tips, the restaurant is required to withhold source deductions before the tips are paid to the employees.  Further, the restaurant is required to pay its employer portion of the EI and CPP on the tip income.  This will mean that the government will get the required deductions whether or not an employee files a tax return.
The third reason, and which seems to be the CRA’s new policy, is that if the tips are controlled tips, the CRA treats the entire amount of tips received by the restaurant as taxable income.  The restaurant will only be entitled to a deduction for the amounts that it can show were paid out to the employees.  Where the restaurant has either kept some of the tip income, or doesn’t have the records to establish what was paid out to the employees, that income is treated as unreported income to the restaurant with possible penalties for the failure to report it.  This will obviously mean that restaurants will do their best to ensure that all tip income received is attributed to the appropriate employees and reported on their T4 slips.

While this new policy means that restaurants keeping portions of the tips are required to report it as their taxable income, it also means that restaurants will need to keep detailed documentation on their receipt and payment of controlled tips to employees.  The only saving grace for a restaurant that fails to keep this detailed documentation is that the CRA will review the employees’ tax returns and allow a deduction for the tip income declared.  However, given that not all employees will be filing tax returns, or correctly reporting their tip income, this generally means the restaurant will face a nasty tax bill.

So the major determination for every restaurant to make is whether the tips received by the employees are considered controlled tips.  Unfortunately as there is no actual legislation that defines what is a “controlled tip” versus a “direct tip”, this determination can only be made after reviewing the CRA’s published position and what the Courts have ruled upon, and then applying it to the restaurant’s particular situation.

A further Article on Control Tips will appear in an upcoming Insider-For CRA’s Procedure as it appears on their WEB page click here.

» CALL TO ACTION :  Toronto Comprehensive Zoning By-Law

The ORHMA is urging all Toronto restaurateurs to get involved!

At issue is a comprehensive zoning by-law passed by Council in August 2010 which is punitively restrictive for restaurants, bars and nightclubs.  The zoning by-law will, as currently written, restricts where businesses can operate and as a result a large number of restaurants are now legal non-conforming.  The ORHMA appealed the entire zoning by-law to the Ontario Municipal Board.  In total, almost 700 appeals were filed. 

At a recent meeting of the Planning & Growth Management Committee councillors directed staff to report to Council on April 12 about repealing the comprehensive zoning by-law. This is a positive step in the right direction. However, committee further directed staff to report back in January 2012 with a new zoning by-law but keeping the provisions pertaining to outdoor and rooftop patios and nightclubs, which are extremely restrictive.  It should also be noted that patios and nightclubs were the only business types singled out by committee.  Whereas committee recommended that staff reconsider the entire zoning by-law and begin new consultations their recommendation closes the door to the hospitality industry.  This is punitive and unacceptable.  The ORHMA opposes the entire comprehensive zoning by-law, including provisions pertaining to patios and nightclubs.

In advance of the April 12 Council meeting all members in the City of Toronto are encouraged to phone or e-mail their local councillor, both in the ward you live and in the ward in which your establishment is located, and ask them to vote in favour of the repeal of the entire zoning by-law at the next Council meeting.  Discussions regarding a new zoning by-law must consider the impact on business and review all parts of the zoning by-law, including patios and nightclubs.

For contact information for all members of Council please click here.  The ORHMA will provide more information to members in advance of the council meeting. 
 
» Did You Know?

»» Ministry of Labour :Inspection Blitz Schedule
The ministry’s proactive inspection blitzes on sector-specific hazards help raise awareness and increase compliance with provincial health and safety law. Last year, the ministry conducted 10 blitzes. A new blitz schedule for 2011-2012 is now available and continues to include Musculoskeletal Disorders (MSD). 

»» ableworks.ca is a new free employee recruitment initiative in partnership with the Ontario Restaurant Hotel and Motel Association that was launched in October of 2010.

» Toronto Public Health Meeting Update

The ORHMA – Toronto Region Board and Surety Food Safety Group held a scheduled quarterly meeting with Toronto Public Health (TPH) on March 7th. Among several topics discussed were the ORHMA’s Open for Business submission to the Ontario Government which included two health related recommendations concerning standardization of food premise inspection reporting programs and food handler training and certification programs.  More information on these issues will be included in upcoming Insiders.

TPH discussed their Service Plan for 2011 which includes a target to achieve 90% compliance (green pass), and a completion turn-around of 24 to 48 hours - should a conditional pass (yellow) be issued. In an effort to continue improving their service the use of a Healthy Environments Client Feedback Form is being introduced to provide feedback about recent inspections/investigations conducted by Health Inspectors. This will help to provide operators a voice related to their operation and their relationship with the inspector.  Any restaurateur who has a concern with the outcome of their health inspection or with the inspector may call 311.  All information will be treated confidentially.

The issue of grease trap removal services from an inspection standpoint was also discussed. Whereas the Health Inspector will most likely ask for proof of service (ie: to see the most recent invoice from the service provider) enforcement is the responsibility of the water utility provider (ie: Toronto Water).

Of growing concern is the matter of residual odors from foodservice operations into the immediate surrounding community. With new housing and condominium developments in the backyard of existing foodservice establishments, resident complaints are on the rise. And although some odors may be a nuance to some they are not considered a health hazard. However – water-pipe smoking indoors is a growing challenge for Smoke Free Ontario Act enforcement by the health department. More about this issue will follow. Seems TPH has more than a few delicate issues to deal with.

» Visa & MasterCard Mandated Liability Shift by March 31, 2011
 
VISA and MasterCard recently announced changes to their Intraregional/Domestic liability shift dates and come into effect March 31, 2011.  These effective dates were previously pushed back and this additional time has allowed Merchants to upgrade to chip-enabled terminals.  For more information on these changes and the mandated chip liability shift click here.

» Toronto Hydro-Electric System set to Launch 2011 Conservation and Demand Management Programs under Ontario Power Authority ‘saveONenergy’ Banner

Toronto Hydro-Electric System Limited (“Toronto Hydro”) announced its initial lineup of 2011 conservation and demand management (CDM) programs targeted to Toronto residential and commercial customers.  A wide-range of programs will be launched in March that have been designed to encourage customers to invest in conservation measures, which in turn will help customers save on their electricity bills, reduce Toronto Hydro’s peak electricity demand and help the environment.

The ‘saveONenergy’ CDM programs will help Toronto Hydro meet its obligation to the Ontario Energy Board to reduce summer peak demand in Toronto by 286 megawatts (MW) and reduce consumption by 1,304 gigawatt-hours (GWH) by the end of 2014. Below are highlights of the programs now available.

»» Expanded Programs For Our Commercial and Industrial Customers
Audit Funding:  Incentives are available to conduct energy studies of medium and large size facilities. The Audit Funding incentive can cover up to 50% of the cost of an energy audit, based on requirements that take into account the size and complexity of the buildings.  A comprehensive evaluation of a building's energy performance will determine opportunities for improvement.   These options for maximizing energy savings will form the basis of an action plan and help to identify opportunities with other programs, such as the Retrofit Program described below.
Retrofit Program: This program offers incentives of up to 50% of project costs for pre-approved retrofits for commercial, industrial, governmental, social housing and municipal facilities. Financial incentives are available for replacing inefficient existing equipment with high efficiency equipment that will reduce the demand for electricity and improve the efficiency of operational procedures and processes.
Small Business Lighting: This program offers eligible small businesses up to $1,000 in energy-efficient upgrades. Energy efficient upgrades can go a long way toward reducing electricity consumption and managing monthly electricity costs.

• Businesses can obtain more information online by clicking here. 
• Programs For Residential Customers:  Coupons, heating & cooling incentive, fridge and freezer pickup and details on other programs, visit: www.torontohydro.com/conservation

» Loss Prevention:  Weather Related Hazards

Snow/ice build-up on roofs:
• Heavy snow loads or freezing rain build-ups on roofs may result in a roof collapse.
• Initiate a roof inspection and maintenance program for snow/ice removal. Inspect snow/ice build-ups after heavy snow/ice or a series of smaller storms.

Clearing snow/ice accumulations:
• Identify and clear snow from any roof hatches and sky lights to prevent staff from walking on and possibly falling through these openings.
• Use safety rigs and lines to prevent staff from falling off a roof.
• Erect barricades surrounding building where snow/ice is being removed to keep vehicles and pedestrians away from falling snow area.
• Avoid using ice picks or sharp tools that could damage the roof.
• To avoid damage to roof covering, do not attempt to remove all of the ice cover (leave 2-3”).

Icicles and ice patches:
• Icicle build-up on the edges of the roof line can fall and injure pedestrians walking by or cause damage to vehicles parked near the building.
• Water draining from downspouts will freeze and create large ice patches that could be serious slip and fall hazards.

Visit www.westernfgis.ca/orhma for more information.

» Take Your Business to the Next Legal Level with NEBSCorp.ca in 2011

Most small businesses start out either as a sole proprietorship or a partnership.  However once established, many businesses should consider forming a corporation to take advantage of the legal entity.

Here are the top five reasons to incorporate:

• Reduce your personal liability – you are not personally liable if something goes wrong with your business.
• Save on taxes – lower income taxes and other tax benefits
• Add Credibility – you give the impression you are larger and more knowledgeable.
• Attract investors – a corporate structure shows you are a viable investment opportunity.
• Establish a business line of credit – you won’t have to rely on your personal credit when the business needs loans and lines of credit.

To learn more about how you can easily incorporate your business online, visit NEBScorp.ca, a division of NEBS Business Products.  By being an ORHMA and using Member code #98209 you can receive special pricing off incorporating and other legal services.  Visit  NEBScorp.ca  and get started today! 1 866 732 4524

» OTEC - Accessibility for All!

How can you make your organization stand out from the rest? What can you do to encourage customer loyalty? Why do your customers continue to access your services? There are a number of reasons, but none more important than providing excellent and consistent service levels to every customer, every time! OTEC’s "Accessible Service Excellence" and "Leading Accessible Service Excellence" workshops will raise your management and team’s awareness about how best to satisfy the needs of clients and visitors with disabilities or accessibility needs.

Learn how to make your organization stand out by providing excellent service levels to this important segment of the marketplace and encouraging customer loyalty and continued business growth. Recent studies reveal that 1 in 8 Canadians have a disability and people with disabilities are responsible for $25 billion in annual customer buying power in Canada. Now, with these two informative workshops, you can not only ensure that your organization can fulfill all of your customers’ needs but achieve compliance with the new "Accessibility for Ontarians with Disabilities Act" (AODA).

For more information or to register for OTEC’s Accessible Service Excellence series of workshops taking place May 10th -11th, 2011 click here! ORHMA Members Receive Preferred Rates! Guaranteed to pay the lowest rates at any training session!

» Mark Your Calendar

»» ORHMA Events:

• ORHMA Simcoe Region Speaker Series:  Violence in the Workplace & Proposed Changes to the Occupational Health & Safety System – April 13th 2011 at 3:30 pm Holiday Inn & Conference Centre Barrie.  Register today to save your seat by emailing your name, business, phone number to atjan@orhma.com.
• ORHMA Provincial 8th Annual Golf Tournament – Monday Jun 6th Lionhead Golf & Country Club
• ORHMA Provincial Annual General Meeting – Tuesday June 7th at 3:00 pm, at the Delta Meadowvale Resort & Conference Centre, 6750 Mississauga Road, Mississauga.  Click here for more details.
• ORHMA Ottawa Region Annual General Meeting (AGM) – Tuesday, May 10th, 2011 at 8:30 a.m. at the Restaurant International, Algonquin College.   
• ORHMA Ottawa Region Golf Tournament  -  Wednesday June 15th at Club de golf Outaouais 

»» Other Events:
• 2nd Annual Canadian Restaurant Investment Summit – April 13th & 14th, 2011  Ritz-Carlton Hotel, Toronto - Early bird pricing is still available using promo code ORHMA. This year’s Conference promises to be  thrilling and informative.  Sessions on current events that affect the restaurant climate. Network with peers from across Canada. ORHMA President  & CEO Tony Elenis will be speaking on Current Trends and Events and implications for the Restaurant Business. 
• Tax Information Forums (TIF) - Richmond Hill, Sault Ste. Marie, Ottawa  The Ontario Ministry of Revenue will be hosting a free Tax Information Forum (TIF) event in the following regions and is extending an invitation to all ORHMA members to attend: