Tag Archives: waitrons

Restaurant Tip Tax: SARS declares tips tax free

Last week, taxing tips of waiters and other employees, who receive gratuities from customers for good service, was a hot topic on Twitter and other social media platforms, following the publishing of a clarification of the payment of tax on tips by SARS.  Legal views confirm that employers cannot deduct PAYE, the Skills Development Levy (SDL), and UIF from employee income generated from tips, but it also means that the tip income of employees cannot be used as a basis for pension and medical aid benefits.

Business Report wrote that “Waitrons can keep their hard earned tips for themselves and don’t have to worry about the tax man…  According to the last week’s ruling, the transfer of tips handed over to an employer by an employee for ‘safekeeping’ did not constitute a payment of remuneration”.  This view is based on the Group Tips Policy, by which staff pass on their tips to their employers for safe-keeping whilst they are working.  Legal firm Cliffe Dekker Hofmeyr is quoted as saying that the Group Tips Policy sees tips “…as gratuitous payments to which the employees have no entitlement or an expectation of receipt as part of the performance of their duties”, and therefore should not be taxed.

Far more complex is an article by lawyer Stephan Spamer at ENS and candidate attorney Jonathan Sacks, writing on Moneyweb.co.za.    They write that the increased usage of credit cards by customers for safety reasons has led to a large percentage of tips being added to credit card payments, going to the employer instead of the employee.  The employer then has to transfer the tips to the employees.  According to the Fourth Schedule to the Income Tax Act, 58 of 1962, ‘gross income’ includes ‘any amount received or accrued in respect of services rendered or to be rendered, including a voluntary award, as well as any amount received or accrued in respect of or by virtue of any employment’.  The lawyers argue that a ‘causal relationship’between payment received and the service provided must exist for that income to be defined as ‘gross income’.  On the basis of this relationship, the writers argue that the tip payment is part of gross income, and is therefore taxable, especially if the expectation at the time of appointment of the employee was to receive tips.  The article becomes confusing when the writers argue that the definition of ‘remuneration’, including ‘all payments and amounts payable, in cash or otherwise, whether or not for services rendered and includes salary and wages, leave pay, bonuses, gratuities, commissions, over time pay and other amounts paid for services rendered as well as allowances and advances’, is similar to that of ‘gross income, but that it does not mean that the employer must deduct the valid taxes and deductions.  They argue that it is not the employer paying the tip – in essence it is the customer paying it via the employer, who just holds the tip on the employees’ behalf, and therefore as this cannot be viewed as remuneration, no taxes and fees have to be deducted from the monies paid to employees.  Employees can, however, request in writing that the employer deduct PAYE to reduced their tax liability.  Given their conclusion that no tax is payable on tips by employees, the writers argue that no SDL and UIF is deductible either. 

Given the complexity and legality of this SARS Tip Tax ruling, we quote an extract of an article on Moneyweb, written by Cliffe Dekker Hofmeyr Employment Law Director Gillian Lumb and associate Pranisha Maharaj: :“The Binding Class Ruling: BCR 027 recently issued by Sars, declared that the transfer of tips (that were handed over to the employer by the employees for safekeeping in terms of the employer’s proposed Group Tips Policy) from the employer’s bank accounts into the employees’ bank accounts does not constitute a payment of remuneration by the employer as contemplated in paragraph 2(1) of the Fourth Schedule of the Income Tax Act. Essentially, this paragraph of the Act provides that an employer who pays or becomes liable to pay any remuneration to any employee must deduct or withhold employee’s tax from such payment. Binding Class Rulings are intended to promote clarity on the interpretation and application of the tax laws to a class of persons who apply for a ruling in respect of a proposed transaction to which it is a party. Accordingly, tips will not form part of the calculation of any benefit calculations for the employees’ remuneration packages, for example pension or medical aid.  The ruling is in line with the Sectoral Determination 14: Hospitality Sector, South Africa  which defines “remuneration” as ‘any payment in money or in kind, or both in money and in kind excluding any gratuity or gift received from a customer for service rendered”.

The new Tip Tax directive by SARS has been back-dated to August 2010, and covers the five year period from that date.  This raises the following questions:

*   Can employees that had PAYE, SDL and UIF deducted between August 2010 and July 2011 receive their tax and other deductions back, from the employer and/or SARS?

*   Can employers deduct the tip income that went through their credit card machines, and was therefore deposited into the business bank account, from their taxable income for the calculation of VAT and income tax?

Interestingly, yet not surprising, the hotel association FEDHASA has not officially published a guideline about this Tip Tax amendment for their hotel and restaurant members!   On Twitter, the FEDHASA Cape Director for the Restaurant sector, Rey Franco, wrote that tips received via credit card are taxable, and that only cash tips received by waiters directly are not taxable.  We believe that, in the light of the above, he is incorrect.

Chris von Ulmenstein, Whale Cottage Portfolio: www.whalecottage.com Twitter: @WhaleCottage

Restaurant Review: Reuben’s at the One&Only Cape Town is a-maze-ing!

Let me admit at the outset that I was sceptical as we set off to our dinner on Saturday evening at the new Reuben’s at the One&Only Cape Town, which opened last Wednesday.  I need not have been.  I was overwhelmed by how outstanding the food and service was, with fair prices for the food, but with generally more expensive dishes than those at Reuben’s in Franschhoek, and with very high prices for mostly exceptional wines.  Reuben’s at the One&Only Cape Town is a ‘grown-up’ and sophisticated Reuben’s, the best Reuben’s by far!

I have never written a review about Reuben’s Restaurant, despite it having been my favourite ever since I stumbled upon it in June 2004, when it first opened in Franschhoek.  Immediately I felt it was a restaurant for me, and it became my favourite, and we recommended it passionately to our Whale Cottage Franschhoek guests.  The initial service levels, which made Reuben’s the top of the Eat Out Top 10 Restaurants as well as Reuben Riffel the Top Chef six months after opening, could not be maintained, and gradually the service levels dropped, starting with the telephonic bookings, down to rude service from the then-sommelier/manager.

A review of the new Reuben’s needs to trace back the history of its opening at the One&Only Cape Town.  It is well-known that Gordon Ramsay’s maze opened at the hotel in April 2009, and that the contract with the restaurant was abruptly cancelled by the hotel at the end of July.  Reuben Riffel was tipped to open in Ramsay’s place, but Reuben denied this to us and to the media.   Clare McKeon-McLoughlin of Spill Blog confidently predicted Reuben’s appointment, even though Reuben had not yet made a final decision nor signed the contract.  We were told that her disclosure caused mayhem in the hotel, as staff at the hotel did not know about the appointment, and that the then Hotel PRO Etienne de Villiers’ supposed “endorsement” of the apppointment in the Spill blog post was untruthful, and may have led to his recent departure from the hotel.   It would appear that an Irish maze staff member, who has since returned to London, was the mole, spilling the beans to Spill.   In less than a month after the announcement of Reuben’s appointment, the restaurant has opened its doors at the One&Only Cape Town, and is confidently trading.   In terms of this controversy, Reuben says he prefers to stay out of it and remain in the kitchen!

When I made the booking on the morning of our dinner, the restaurant answered as “Restaurant at One&Only”, the interim name that the restaurant had before Reuben’s opened.   We were allowed to park in the basement of the hotel, and there is no charge.  When we walked into the restaurant, we could not help but feel that we were in maze.  I was looking for the Brasserie that Reuben had been quoted to be opening at the One&Only Cape Town, but we could not see it.  The same horrid carpet and massive orange lampshades are still there.   The furniture has not changed, although the table tops have been varnished and the Reuben’s name engraved into them.  Other than branding on the chic black and burgundy staff aprons, on the lift list, and on the menu, there is no Reuben’s branding outside or inside the restaurant.  Surprisingly, the orange/brown colouring of the maze interior matches Reuben’s rust brown colour scheme almost perfectly.   We were critical of the maze interior when we went there soon after its opening last year.  Reuben says that the interior will be amended in three stages, with the tables completed, and bistro boards with specials going up shortly.   The interior decorator that Reuben’s has used in Franschhoek and Robertson will be coming this week to see how she can soften the harsh hotel interior.

The maze and Reuben’s marriage will take some time to gel to the benefit of the new restaurant.   From maze the restaurant has inherited the decor, all the waitrons (there was no shortage of staff on the floor), managers and also kitchen staff, the outstanding sommelier Andre Bekker and his Diamond award-wining Diner’s Club Restaurant Winelist, a wine library of over 700 wines, the choice of three breads baked by the kitchen, and the waitron service standards that have been set in the past, being much higher than those of Reuben’s in Franschhoek.   From Reuben’s comes the menu, the little coarse salt pots on the tables, a far more informal style of dress (the ties of the managers have come off), a more relaxed interaction with customers, something that was not encouraged at maze, as well as new serving dishes and some cutlery.  The One&Only staff were trained by Reuben’s wife Maryke about their service standard, the menu and the food.  The staff have tasted the dishes, and are still doing so as Reuben fine-tunes the menu for the official 1 October start.   The winelist and the menu are miles apart, and need to find each other, the former being very expensive and also out of character with the Brasserie feel which Reuben’s wants to create, and with the winelists in Franschhoek and in Robertson.

The exact relationship between Reuben Riffel and the One&Only Cape Town is unclear, but the hotel employs and pays the Reuben’s kitchen and waitron staff.   The brief was for Reuben to get the best kitchen staff possible.  This reduces the risk for Reuben, and means that he is compensated for his brand name and for his time through a share of the turnover.   Having a room at the hotel is a fringe benefit the Reuben’s Franschhoek staff are enjoying when they come through to town.  The arrangement with the hotel has allowed Reuben to appoint Camil Haas, previous owner of Bouillabaisse in Franschhoek and Green Point and of Camil’s in Green Point, to substitute for him at the One&Only Cape Town and in Franschhoek from October, giving each of these two Reuben’s a heavyweight chef every day.   In addition, Maritz Jacobs, previously of Le Quartier Français and 15 on Orange hotel, is the new Head Chef at the One&Only Cape Town, meeting Reuben’s requirement for a young and energetic chef.  The Pastry Chef is René Smit.  Reuben is called the Concept Chef on the menu, as he is on the Reuben’s menus in Franschhoek and in Robertson.  Samantha Housden from Tank will be joining as the Restaurant Manager on 1 October.  Reuben recently bought out his Boekenhoutskloof partners Tim Rands and Marc Kent, who helped him set up the business six years ago.  He says this gives him new flexibility to make decisions more quickly, and to steer his business where he wants it to go.

The menu is A3 in size, and has the same format as that in Franschhoek and Robertson.  It is neatly divided into a Starters, Main Courses and Desserts section, as well as a mini Vegetarian menu of Starters and Main Courses, a Fish and Seafood section, as well as Side Orders.   In future it will also carry the names of the special suppliers of fine organic produce that Reuben’s will be sourcing.   The menu content in terms of dishes offered is vastly different at the new Reuben’s, compared to the Franschhoek branch.  The menu is being fine-tuned in the next 10 days before the official opening, and has already seen changes in the first four days of its operation.

A small bowl of olives was brought to the table, as was three types of bread: a baguette, tomato bread and black olive bread.   Butter was on the table, as was a bottle of Willowcreek olive oil.  I ordered Asparagus with a hollandaise and orange reduction (R60) as a starter from the Vegetarian section, which was topped with the most wonderful micro-herbs, being miniature coriander, basil and rocket, and adding the most wonderful taste to this dish, beautifully presented on a glass dish.   Other starters are oysters at R25 each, pickled veal tongue (R60), chilli salted baby squid and shredded duck salad at R70 each, salmon tartar and cured venison at R75 each, mussels (R80), and a white asparagus and langoustine salad (R110).

My main course was the most wonderful kingklip (R140) – a good portion of firm fish, served with the unusual combination of avocado, on a bed of mash (I chose it to be plain, but the menu specified it to be tumeric mash), and with crunchy Chinese cabbage, a mint salsa and coconut cream.   The same micro-herbs served as garnish for the dish, and again added a unique taste to round off the dish, the best kingklip I have ever eaten.  My only criticism was that a serrated knife instead of a fish knife was served.  My colleague had Karoo lamb curry (R135), served in a bowl, with sambals (yoghurt and pineapple, and chopped tomato and cucumber) and basmati rice in a tiny iron pot, presented on a separate dish.    She loved the genuine Cape Malay taste of it, and picked up garlic and ginger notes, as well as jeera, cardamom and barishap spices in her lamb stew, with dhania leaves on top.  She called it “hemelse kos”, it tasted so good!   Other Main Course options are lamb rack (R175); ostrich fillet, 180 g beef fillet and a 450 g rib-eye steak at R 170 each; quail saltimbocca (R130); 240g sirloin and pork belly at R125 each; veal tripe (R120); and Reuben’s faithful wonderful calf’s liver at R115.  Other Fish options were yellowtail (R110) and Tandoori spiced prawns (R170).   Side orders cost R 35, but all main courses come with a starch and a vegetable.

For dessert my colleague had Muskadel crème with poached hanepoot grapes, ginger crumble and raspberry ice cream, in a glass bowl and served on a slate plate.  Slate is used extensively at Jordan’s Restaurant with George Jardine, and to a lesser extent at Jardine’s.  My dessert was a fascinating Lemon and olive oil custard, to which was added cocoa crumble, a half-round thin slice of chocolate as well as Swiss chocolate mousse, finished off with edible gold paper which I thought the kitchen had forgotten to take off!   Desserts cost R65, expensive I felt, but the portions were generous.  Other desserts are a seasonal fruit compote, Amarula scented malva pudding, Tequila sundae, and a bitter chocolate fondant, the latter costing R80.  I felt, on the basis of two desserts, that the desserts needed more work.  My cappuccino did not arrive at the same time as the dessert, as requested, and was not very foamy.  It was immediately replaced with one in a bigger cup size, and was very foamy.  Petit fours were brought to the table after the dessert plates were cleared, also on a slate plate.

The sommelier Andre has been at the hotel almost since it opened, and he says that the winelist has not changed much from its impressive start.   They have added wines bought at the Nederburg and CWG auctions, as well as garagiste and boutique winery brands.   Some international wine prices have been reduced over time, and some local wine prices have increased.   The 37-page winelist will be changed, the lengthy introduction to the South African wine industry to be removed.  I disliked the division of the wines by region, and then by varietal on the maze winelist, but this will not change.  It means that if one likes drinking a Shiraz, for example, one has to check through every region’s Shirazes to check which one to order.  It could take one  a whole evening to wade through the many wines on offer, including 50 wines-by-the-glass, 32 champagnes, and 18 MCC sparkling wines, as well as wines imported from France, Spain, Italy, Portugal, Argentina, Chile, New Zealand, the USA, and Australia.   I did not like the file/folder look of the winelist, and do not remember it looking like this at maze.   Its practicality in updating vintages and prices is an obvious advantage.  The yellowish cover of the wine list does not match the Reuben’s colour scheme.   Wines-by-the-glass can be served in 50ml, 150ml and 250 ml quantities, making the expensive wines a little more affordable by reducing the quantity one drinks!  Wine flights in three’s are also available, by region or by varietal.   I chose a glass of 2006 Glen Carlou Shiraz, which cost R 72 for a 150ml glassful – 50ml cost R24, and 250ml R120.   The 2005 Luddite Shiraz prices were R37/R112/R187 per glass.  The 2007 Brampton cost R9/R28/R47.  Migliarina Shiraz 2006 cost R17/R52/R87.  A glass of 150ml of bubbly cost R260 for Ayala ‘Rose’ Majeur, R200 for Billecart Salmon Brut, R98 for Graham Beck Rosé, R49 for Graham Beck Brut, and R44 for Villiera.   It is clear that the wine prices are exceptionally high.  Andre spoilt me with a complimentary glass of dessert wine.

We felt privileged that Reuben came out of the kitchen to sit and chat with us.  He intends to come out of the kitchen a lot more in future, and having chefs working for him will allow him to do this.  Starters will be prepared behind the counters inside the restaurant in future, to allow diners to connect with the food preparation and the kitchen staff too.   Reuben is working on creating synergy in the menus for his three Reuben’s, yet having unique items on each menu that reflect what customers like in each area.  At the One&Only Cape Town the calf’s liver is extremely popular, he says, as is his Veal tripe (‘Pens en Pootjies’).   We were struck by Reuben’s humility and quiet confidence that he has made the right decision by opening his latest Reuben’s at the One&Only Cape Town.  He recognises that service levels can improve in Franschhoek, and he sees a benefit of exchanging his staff between the two locations, so that the One&Only Cape Town service standards can become those of the Franschhoek staff too.    There will be no launch function, Reuben preferring to quietly open and delivering on the expectations of a more demanding Cape Town as well as international clientele.   Reuben’s staff also prepare the hotel breakfasts.

We will recommend Reuben’s at the One&Only to our Whale Cottage Camps Bay guests with confidence, and we will return.

Reuben’s at the One&Only Cape Town, One&Only Cape Town, V&A Waterfront.  Tel (021) 431-5888. www.reubens.co.za (The new restaurant is not yet listed on the Reuben’s website, nor on the One&Only Cape Town website).  Open for breakfast, lunch and dinner, Monday – Sunday.

POSTSCRIPT 20/9: Samantha Housden’s restaurant experience includes launching London’s Level 7 Café at the Tate Modern Gallery and managing the Eyre Brother’s restaurant owned by the godfather of gastro-pub cuisine David Eyre.  She started Cilantro in Hout Bay, having been its chef too.  She has left Tank to join Reuben’s at the One&Only Cape Town.

POSTSCRIPT 25/9: We returned for dinner a week later, and met the new Restaurant Manager Samantha Housden for the first time.   She came to check on our table regularly, as did Marcus, an interim manager.  Due to a strong attempt to upsell us by a waiter, we asked for waiter Victor, who had served us the previous week, and his service was as good as ever.   The recognition by the staff from our visit a week ago was impressive – from the hostess as we arrived (I had used my son’s name for the booking this time), to the sommelier Andre and the waiter Victor remembering specific requests and likes from a week ago – in line with Reuben’s Franschhoek.   Disappointingly the food was not as good as it was a week ago – the kingklip was undercooked and did not have the lovely microherbs (but a generous portion was brought to the table when I asked about them) and the sirloin had lots of sinews.   Reuben was in the kitchen, and spontaneously came to say hello.  I was delighted to hear that sommelier Andre has heeded our feedback, and will revise the winelist, to arrange it by varietals, and to mention the regions, which will make wine selection much easier in future. 

POSTSCRIPT 14/1:   I arrived in good spirits, and was shocked at the disappointing food quality and service.   Although the telephonist tried to put through my call three times, so that I could check if I could still get a table at 22h00, no one in the restaurant answered the phone.  I decided to arrive anyway.   I was warmly received by the hostess, and discovered immediately that Manager Samantha Housden is no longer at Reuben’s.  The evening shifts were getting to her, I was told.  Kagiso Mmebe is the new Manager, and started three weeks ago, having been a lecturer in Restaurant Practice at the University of Johannesburg.  A sweet waitress Unite took my order efficiently, and that is where her service support ended.  She brought butter and olives, but never came with the bread.  I had to ask a manager for it.  It was explained to me that Unite is a runner, being trained up to be a waitress, but she wears the same colour shirt as do the waiters, so one cannot identify her lesser skills.  She is meant to work under the guidance of a waiter, but this did not happen.   I ordered the baby chicken main course (R135), which was not cooked properly, even after sending it back once.   My choice of carrots with vanilla and honey as the side-dish was an excellent one.   The wild mushroom sauce tasted strongly of an Oxo stock cube, with not a piece of mushroom to be seen.  The sauce was taken away, and mushrooms added.  I had to ask for a finger bowl.  The wine steward Tinashe Nyamudoka was wonderful, just taking my wine order and pouring the Glen Carlou Shiraz 2004 at the table, as requested.   The frozen espresso cake with a berry coulis and an odd-looking meringue was excellent (R65).   Assistant Manager Marcus Isaacs kindly took the chicken off the bill.  It was disconcerting to hear from the staff that Reuben Riffel has barely been seen at the restaurant in the past two weeks, although Marcus disagreed.   Camil Haas is not at Reuben’s One&Only at all anymore.  There is no sign of any further decor changes, after the curtains were opened.  The new summer menu, launched last week, has very understated Reuben’s branding, and does not look like a Reuben’s menu anymore, and there is no listing of the names of the chefs on it anymore – not even Reuben’s name is mentioned!  Chef Aviv Liebenberg from Reuben’s Franschhoek (and previously Robertson) has been moved to Cape Town, working with Chef Maritz.   I could not help but be concerned as to where Reuben’s in the One&Only Cape Town is heading – it certainly is no longer a-maze-ing!

Chris von Ulmenstein, Whale Cottage Portfolio : www.whalecottage.com