On November 7, 2024, Quebec enacted Bill 72, introducing significant changes to consumer protection laws, including how tips are calculated in the hospitality industry. This legislation mandates that tips must now be calculated on the pre-tax subtotal, not the total amount including taxes.
The deadline to comply with Quebec's new tipping regulation under Bill 72 is May 7, 2025. By this date, all businesses operating in Quebec that accept tips—such as restaurants, bars, cafés, and taxi, must ensure that suggested tip amounts are calculated based on the new law.
For Customers: How Your Tips Are Calculated Now
Previously, when you dined out and chose to tip a percentage, that amount was often calculated on the total bill, including taxes. With the new regulation, tips are to be calculated solely on the pre-tax subtotal.
Example:
Subtotal (before tax): $100.00
Tax (e.g., 15%): $15.00
Total (with tax): $115.00
If you decide to tip 15%, here's how it's calculated under the new rule:
Tip = Subtotal × Tip Percentage
Tip = $100.00 × 0.15 = $15.00
Under the previous method, the tip would have been $17.25 (15% of $115.00).
This change ensures that tipping reflects the value of the service provided, excluding tax amounts.
For POS Providers and Payment Processors: Steps to Ensure Compliance
To adhere to Bill 72, businesses and technology providers must implement the following changes:
1. Update Tip Calculation Logic
Ensure that all systems calculate tip suggestions based on the pre-tax subtotal. This applies to POS terminals, online ordering platforms, and mobile applications.
2. Modify Payment Terminal Prompts
Adjust payment interfaces to display tip options calculated on the subtotal. Avoid using the total amount (including tax) as the base for tip calculations.
3. Display Tip Calculation Breakdown
Provide transparency by showing how the tip amount is derived, such as:
"15% of $100.00 = $15.00"
4. Synchronize POS and Payment Systems
Ensure that POS systems and payment terminals are aligned in their calculations to prevent discrepancies.
5. Review and Update Default Settings
Audit existing configurations to identify and correct any instances where tips are calculated on the total amount, including taxes.
Reference to Government Regulation
For more detailed information on Bill 72 and its implications, you can refer to the official documentation provided by the Quebec government:
Bill 72 – An Act to protect consumers against abusive commercial practices and to offer better transparency with respect to prices and credit
Need Assistance? Contact MYR POS
Navigating regulatory changes can be challenging. At MYR POS, we're committed to helping businesses adapt seamlessly to new requirements. Our team is ready to assist you in updating your systems to comply with Quebec's new tipping regulations.
Contact us today to ensure your business remains compliant and continues to provide excellent service to your customers.
