For the week of October 24, 2012
► Step one: set your goals, says David Christianson
► Economic update: Dispelling global uncertainty
► Evelyn Jacks: New relationship? Beware of tax consequences
► Poll Question: Should governments increase taxes on investment income dividends and capital gains to increase revenues and meet their responsibilities?
► DISTINGUISHED PRACTICES: Tips for Real Wealth Managers™: Broader interpretation of transfer pricing
► Did You Know? Legislation in both official languages
► Tax Tips: How the CRA is helping small business
► Featured Book: Master Your Money Management
► Featured Web Tools: Featured Program: EverGreen Explanatory Notes
“Zapper” gets slapped with $100,000 fine
August 8, 2012
The British Columbia Supreme Court has fined a Richmond. B.C., company $100,000 for selling retailers and restaurants software that erases sales records allowing those companies to evade federal and provincial taxes.
InfoSpec Systems Inc. and its "Zapper” software has been the subject of a couple of actions by the BC. Supreme Court and the Canada Revenue Agency (CRA) beginning in 2010. InfoSpec, which sells computers and software to restaurants and retail outlets, designed the Zapper software to work with point-of-sale systems and electronic cash registers. It erases sales records, allowing InfoSpec's customers to suppress income and evade taxes.
The first to feel the sting of the CRA was InfoSpec salesman David Au. On Dec. 16, 2010, the BC Supreme Court convicted Au of one count of fraud over $5,000 in relation to the sale of the Zapper software. Au was sentenced to two years and six months in jail.
Upon sentencing Au, the court noted: "It is particularly aggravating that Mr. Au continued to sell the Zapper to customers after he became aware of the CRA investigation of InfoSpec and attempted to assist his customers to evade detection during the CRA's audits. As a consequence, Mr. Au's actions are highly blameworthy and attract a sentence that both denounces his misconduct and acts as a general and specific deterrent for him and like-minded others.”
Then, on June 22, 2012, InfoSpec itself was found guilty of one count of fraud over $5,000 in relation to the sale of the software. On July 20, 2012, the court gave its sentence — a $100,000 fine.
The court concluded that Pius Chan, the president of InfoSpec, was the "directing mind of the corporation” and he "intended to defraud the public by providing or distributing a Zapper program” that allowed InfoSpec customers to suppress income and thereby evade taxes.