OTTAWA – The Canada Revenue Agency (CRA) reports that the first phase of a two-year nationwide study of hidden cash sales in Canadian restaurants has uncovered $40 million of unreported income on which no taxes were paid — a number that will likely increase once the pilot project is complete.
The national probe follows a Quebec government 2007/2008 study that found the use of “zapper” and “phantom-ware” — illegal cash-income-suppression software — had cost the provincial treasury an estimated $425 million and subsequently led to legislation prohibiting the design, manufacture, installation and use of such programs.
Since 1997 the use of zappers has been suspected in more than 230 investigations by Revenu Quebec. In 713 searches of merchants, up to 2008, Revenu Quebec found 31 zapper programs working on 13 different POS systems. Some 196 postings on the Revenu Quebec website deal with zapper incidents. “Preliminary work indicates that the practice is prevalent across Canada,” said CRA’s Caitlin Workman. “These are ongoing investigations, and the CRA has identified additional businesses using electronic sales suppression.”
It is a federal criminal offence to alter books and records to avoid taxes. Penalties can run up to five years in prison and fines up to twice the evaded sums.
