Tax cheats beware: zapper use will not be tolerated
Minister Findlay meets with local businesses to discuss new civil and criminal sanctions for possession or use of electronic suppression of sales software
August 13, 2014 - Saskatoon – Canada Revenue Agency
The Honourable Kerry-Lynne D. Findlay, P.C., Q.C., M.P., Minister of National Revenue, joined by Minister Lynne Yelich, Member of Parliament for Blackstrap, and Kelly Block, Member of Parliament for Saskatoon-Rosetown-Biggar, today took part in a roundtable discussion with business owners to discuss new sanctions introduced earlier this year to combat the use of electronic suppression of sales (ESS) software and its contribution to the underground economy.
- Economic Action Plan (EAP) 2013 proposed new administrative monetary penalties and criminal offences under both the Excise Tax Act and Income Tax Act targeting those participating in the use, possession, sale or development of ESS software. Those EAP measures took effect on January 1, 2014.
- Earlier this year, the Canada Revenue Agency (CRA) began an awareness campaign to ensure that businesses were aware of the new sanctions. The awareness activities will conclude this summer.
- As of September 1, 2014, the CRA will begin to impose these new civil penalties and criminal sanctions for participating in the use, possession, sale or development of ESS software.
- ESS software (commonly known as “zapper” software) selectively deletes or modifies sales transactions in point-of-sale systems, electronic cash registers and business accounting systems, leaving no record of the original transaction behind. The software allows businesses to underreport their revenue and avoid paying taxes.
- Under the new measures, businesses that use, possess, or acquire ESS software will face a fine of $5,000 for the first infraction and $50,000 on any subsequent infraction. Anyone who participates in manufacturing, developing, selling, possessing for sale, offering for sale or otherwise making available ESS software will face a fine of $10,000 for the first infraction, and $100,000 on any subsequent infraction. They may also face criminal charges of up to $1 million in fines, up to a five year jail term, or both.
“Our Government is serious about cracking down on tax cheats—including those who manufacture or use electronic suppression of sales software. We now have the tools to penalize these tax cheats with stronger civil and criminal consequences, including fines and even jail time. Participation in the underground economy hurts all Canadians.”
“The severity of these sanctions speaks to how serious a crime this is. We are committed to rooting out tax cheats and making sure they are punished accordingly. In keeping with our commitment to reducing red tape, we have enacted these measures without creating additional reporting requirements for compliant businesses.”