• First Reference
  • About us
  • Contact us
  • Blog Signup 📨

First Reference Talks

Discussions on Human Resources, Employment Law, Payroll and Internal Controls

  • Home
  • About
  • Archives
  • Resources
  • Buy Policies
You are here: Home / Business / New penalties for businesses that use illegal electronic sales suppression software

By Occasional Contributors | 3 Minutes Read June 11, 2014

New penalties for businesses that use illegal electronic sales suppression software

Image: www.northumberlandview.ca
Image: www.northumberlandview.ca
The Canada Revenue Agency (CRA) is aware that electronic sales suppression (ESS) software is being marketed and sold to Canadian businesses. As part of its efforts to combat the underground economy, it has introduced new measures to address this problem.
ESS software (commonly known as zapper software) is illegal. Designed to work with point-of-sale systems and electronic cash registers, businesses use this software to knowingly delete part of their sales from their computer records to reduce their GST/HST and income tax obligations. Using ESS software offers an unfair advantage to those who use it to circumvent Canada’s tax laws, which in turn undermines the competitiveness of businesses that follow the rules.
The Government of Canada is committed to protecting the integrity of Canada’s tax system. New measures took effect on January 1, 2014, that allow the CRA to impose civil and criminal penalties for designing, using, possessing, acquiring, manufacturing, developing, selling, possessing for sale, offering for sale, or otherwise making available ESS software.
Individuals and businesses who possess or use ESS software now face monetary penalties, court fines, and possibly even jail time. The penalties for using ESS software can be up to $50,000 and jail time up to two years. Anyone who manufactures, develops, sells, possesses for sale, offers for sale, or otherwise makes available ESS software faces up to $100,000 in penalties and up to five years in jail.
The CRA is working hard to detect and deter those who choose not to comply with tax laws, so that all income is reported, the proper amount of taxes is paid, and the tax system is fair for everyone. This includes working to identify those who design, use, possess, acquire, manufacture, develop, sell, possess for sale, offer for sale, or otherwise make available ESS software. By discouraging the use of ESS software and penalizing those who continue to use it, the CRA is helping to ensure a level playing field for all businesses and taxpayers.
Although customers may not notice if a business is using ESS software, they can still do their part by always asking for a copy of their receipt. If you know of any taxpayer who is not complying with the tax laws, let us know. We will review the information and, when warranted, take appropriate action. For further information and a contact number, go to Informant Leads Program.
If you have been using ESS software and want a second chance to correct your tax affairs, you can make things right through the CRA’s Voluntary Disclosures Program (VDP). The VDP allows taxpayers to correct inaccurate or incomplete information or disclose information they have not previously reported to the CRA. If they make a valid disclosure before they become aware that the CRA is taking action against them, they may only have to pay the taxes owing plus interest. Go to Voluntary Disclosures Program for more information on the program.
If your business has been contacted about ESS software or if you have information that could help the CRA identify someone who develops, sells, or uses the software, you are encouraged to contact the CRA Informant Leads Program where you will find information on how to report suspected tax evasion.
Get it right from the start—don’t zap! Visit About the underground economy to learn more about what the CRA is doing to address the underground economy.
For more information on the new measures to combat the use of ESS software, read the questions and answers or visit Electronic suppression of sales.
By Knotia, EYEP and/or E&Y LLP and/or CPA Canada

  • About
  • Latest Posts
Occasional Contributors
In addition to our regular guest bloggers, First Reference Talks blog published by First Reference, provides occasional guest post opportunities from various subject matter experts on the topics of human resources, employment/labour law, internal controls, information technology, not-for-profit, business, privacy, tax, finance and accounting, and accessibility in Canada among others. If you are a subject matter expert and would like to become an occasional blogger, please contact us. If you liked this post, subscribe to First Reference Talks blog to get regular updates.
Latest posts by Occasional Contributors (see all)
  • Corporations Canada and new transparency about federal non-profit corporations under the CNCA and new fees for certain documents - December 21, 2022
  • How much should a Canadian registered charity spend on administration? - November 30, 2022
  • Finance proposes changes to disbursement quota for charities and some increased transparency - November 11, 2022

Article by Occasional Contributors / Business, Finance and Accounting / Business, Canada Revenue Agency, Canada's tax system, Canadian businesses, computer records, CRA, electronic cash registers, electronic sales suppression software, ESS, ESS software, GST/HST and income tax obligations, Income Tax Act, penalties, point-of-sale systems, risk management, tax laws, underground economy, zapper software

Share with a friend or colleague

Get the Latest Posts in your Inbox for Free!

Electronic monitoring

About Occasional Contributors

In addition to our regular guest bloggers, First Reference Talks blog published by First Reference, provides occasional guest post opportunities from various subject matter experts on the topics of human resources, employment/labour law, internal controls, information technology, not-for-profit, business, privacy, tax, finance and accounting, and accessibility in Canada among others. If you are a subject matter expert and would like to become an occasional blogger, please contact us. If you liked this post, subscribe to First Reference Talks blog to get regular updates.

Footer

About us

Established in 1995, First Reference is the leading publisher of up to date, practical and authoritative HR compliance and policy databases that are essential to ensure organizations meet their due diligence and duty of care requirements.

First Reference Talks

  • Home
  • About
  • Archives
  • Resources
  • Buy Policies

Main Menu

  • About First Reference
  • Resources
  • Contact us
  • 1 800 750 8175

Stay Connected

  • Facebook
  • LinkedIn
  • Twitter
  • YouTube

We welcome your comments on our blog articles. However, we do not respond to specific legal questions in this space.
We do not provide any form of legal advice or legal opinion. Please consult a lawyer in your jurisdiction or try one of our products.


Copyright © 2009 - 2023 · First Reference Inc. · All Rights Reserved
Legal and Copyright Notices · Publisher's Disclaimer · Privacy Policy · Accessibility Policy