Sept. 12, 2013, Edmonton – The federal government introduced new measures to combat the underground economy.
Electronic Sale Suppression (ESS) software (commonly known as "zapper" software) selectively deletes
or modifies sales transactions in point-of-sale systems (for example,
electronic cash registers) and business accounting systems, leaving no
record of the original transaction. However, taxpayers are required to maintain adequate books and records as well as all of their electronic data files.
"When some businesses cheat, we all lose," said Member of Parliament for Edmonton Centre
Laurie Hawn, in a media statement.
Under the new proposals in the Economic Action Plan 2013, businesses
that use, possess, or acquire ESS
software will face monetary penalties of $5,000 on a first infraction,
and $50,000 on any subsequent infraction.
Anyone who manufactures,
develops, sells, possesses for sale, offers for sale or otherwise makes
available ESS software will face monetary penalties of $10,000 on a
first infraction, and $100,000 on any subsequent infraction.
Businesses or others found guilty of a criminal offence of using,
possessing, acquiring, manufacturing, developing, selling, offering for
sale, or otherwise making available ESS software will face:
on summary conviction, a fine of not less than $10,000 and not more than
$500,000, or imprisonment for a term of not more than two years, or
both; or
on conviction by indictment, a fine of not less than $50,000 and not
more than $1 million or imprisonment for a term of not more than five
years, or both.
"The Canadian Restaurant and Foodservices Association welcomes this
step, which penalizes the underground economy, not the above-ground
economy," said Garth Whyte, CRFA president and CEO, in a press statement. "These measures
appropriately target the producers, installers, and users of
sales-distorting software, while supporting the competitiveness of
Canada's hard-working small business community, among them 81,000
restaurants, the vast majority of which pay their taxes and operate in
full transparency."
These monetary and criminal penalties fall under the Excise Tax Act and
Income Tax Act, and specifically address software that can suppress
sales records. These
measures are designed to strengthen existing penalties and offences for
making
false statements or omissions under each of the Excise Tax Act and the
Income Tax Act, as well as existing sanctions under the Criminal Code.
"Our Government is committed to cracking down those who attempt to cheat
the system and ensuring a level playing field for honest businesses,"
said Minister of National Revenue Kerry-Lynne Findlay, in a press
release. "All Canadians must meet their tax obligations. Businesses that
use ESS software to underreport their revenues and avoid paying taxes
are on notice. We will continue to support Canadians who work hard, play
by the rules, and pay their taxes."
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