Good afternoon. My name is Pierre Mercille. I'm the senior legislative chief in the sales tax division of the Department of Finance.
The amendment in respect of electronic suppression of sales software is both in part 1, for the Income Tax Act, and in part 2, for the Excise Tax Act. The sales tax division was the lead division in respect of this measure.
Electronic suppression of sales software is commonly known as zappers. It can have basically two forms. It can be a hidden component of the accounting operating system at the point of sale in a cash register. That's usually referred to as phantom-ware, but for simplification we call them zappers. A zapper, per se, is usually something that is not included in the software. It's an addition, or something you can have on a USB key, or it can be on the website. It allows the person who uses that software to selectively delete some of the sales transactions in the records of the system. It can in some cases create a virtual second till. When the auditor comes in, the first thing he will see is the modified, the falsified, record from the business. With more extensive analysis, in some cases the CRA can find there were sales that were deleted using software.
The amendments in both part 1 and part 2 provide administrative monetary penalties for the use, possession, acquisition, manufacture, development, possession for sale...basically all sorts of actions that you can do with this software. There are administrative monetary penalties, and there are also more serious criminal offences that can apply, again, for the same use, possession, acquisition, manufacture, sale, offer for sale.
Basically these amendments are there to combat tax evasion by sending a very strong warning to people that there can be severe consequences for using it. It's also there to deter the development and sale of that software.