Electronic Suppression of Sales Software Sanctions
CRA discourages the use of electronic suppression of sales software (ESS). The CRA has made it quite clear that businesses that are convicted of using, possessing, acquiring, manufacturing, developing, selling, offering for sale, or otherwise making available ESS software will face severe penalties along with jail time. CRA is working to detect companies that are using this software and they are asking customers to always ask for receipts. CRA recommends that if a customer is aware of businesses using ESS that they contact CRA through the Informant Leads Program.
ESS software is an application to modify or delete sales transactions from a (POS)
point of sale system . Some companies use the software to hide their sales from tax and gst/hst. The proposed budget allows for administrative penalties and criminal offences for both tax and GST/HST. If you use the software the first penalty is immediately $5,000 and subsequent infractions are $50,000. If you manufacture, develop, sale or otherwise make available the ESS software , the first infraction is $10,000 and any subsequent infractions are $100,000. There are also new criminal offences for the possession, use acquisition, manufacture, development or otherwise offer the software for sale. If there is a summary conviction there will be 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 conviction by indictment, a fine of not less than $50,000 and not more than $1,000,000 or imprisonment for a term of not more than five years, or both.
If you are using an existing POS system, make sure that your program does not contain any ESS programming. It is essential that you keep records of any assurances that you receive from your software provider. CRA will not penalize a taxpayer if they can demonstrate that they have exercised due diligence in inquiring form the software seller that there is no ESS software on their program. It is essential that you obtain this information in writing from the software seller that they do not have any ESS software.