Archived - Part 2 - Excise Tax Act

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A. Electronic Suppression of Sales (ESS) Software

To combat tax evasion by persons that use ESS software (commonly referred to as “zapper” software), which are designed to falsify records for the purpose of tax evasion, new administrative monetary penalties and criminal offences are being introduced under the Excise Tax Act (similar penalties and offences under the Income Tax Act are implemented in Part 1).

Specifically, the following administrative monetary penalties and criminal offences apply:

Administrative Monetary Penalties

  • For the use of ESS software, an administrative monetary penalty of $5,000 on the first infraction and $50,000 on any subsequent infraction.
  • For the possession or acquisition of ESS software, an administrative monetary penalty of $5,000 on the first infraction and $50,000 on any subsequent infraction, except where a person exercised due diligence.
  • For the manufacture, development, sale, possession for sale, offer for sale or otherwise making available of ESS software, an administrative monetary penalty of $10,000 on the first infraction and $100,000 on any subsequent infraction, except where a person exercised due diligence.

Criminal Offences

  • For the use, possession, acquisition, manufacture, development, sale, possession for sale, offer for sale or otherwise making available of ESS software:
    • on summary conviction, a fine of not less than $10,000 and not more than $500,000 or imprisonment for a term of not more than 2 years, or both; or
    • on 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 5 years, or both.

This measure comes into force on the later of January 1, 2014 and Royal Assent.

B. Supplies of Paid Parking by Public Sector Bodies

A special provision exempts from GST/HST all of a public sector body’s (PSB’s) supplies of a property or a service if all or substantially all – generally 90 per cent or more – of the supplies of the property or service are made for free.

This measure clarifies that this special exempting provision does not apply to supplies of paid parking that are made by way of lease, licence or similar arrangement in the course of a business carried on by a PSB.

Taxable parking would include paid parking provided on a regular basis by a PSB, such as parking spaces or parking facilities operated by a municipality. Occasional supplies of paid parking by a PSB, such as those made as part of a special fund-raising event, would continue to qualify for the exemption.

This measure is effective December 17, 1990, the date the GST legislation was enacted.

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