Ministry of Finance has gathered evidence proving that some businesses use sophisticated technology (zappers and phantom-ware) to electronically suppress sales. That creates an unfair advantage by allowing them to underreport business income and retain the taxes paid by consumers.
According to the report released by the Statistics Canada in 2015, the underground economy in Canada is at 2.3 per cent ($42.4 billion) of GDP for 2012, which, based on Ontario’s GDP share, is estimated to be approximately $15.3 billion.
The use, possession and manufacturing of sales suppression software an offence subject to fines, or in some cases, criminal charges. Find out more about the anti-sales suppression act here.
Discussion paper, released on November 4th 2015 by the Ontario government is meant to trigger business community in sharing their views to ensure that proper technological solution is implemented to prevent further tax frauds. The Ministry of Finance is asking The Canadian Federation of Independent Grocers (CFIG), The Ontario Restaurant Hotel & Motel Association (ORHMA) and similar organizations following questions:
- Do you identify electronic sales suppression as a concern in your sector?
- How can the government reduce the use of sales suppression software?
- What do you think about the technological approaches outlined in this paper?
- What impacts do you anticipate a technological approach would have on Ontario businesses?
- What other areas of underground economy should the government seek to address?
Deadline for all consultations is December 16, 2015.
We will bring you more news on this as situation further develops. For questions and comments, contact us.
