Feeds:
Posts
Comments

Posts Tagged ‘zappers’

I started writing this blog in September, 2009.  At that time, there was very little useful information about restaurant tax audits in Canada (or anywhere).  In the 42 articles that I have written so far, I have tried to fill this gap with practical information geared towards restaurateurs.  Based on the comments I’ve received from a number of readers, I think I have succeeded.  There still isn’t much useful information about restaurant tax audits, other than what you will find in this blog.  That’s a shame, but it keeps me motivated to continue helping as many restaurateurs as I can.

(more…)

Advertisements

Read Full Post »

The Canada Revenue Agency released some details of their 3-year pilot study (it was only supposed to run two years) of fraud in the restaurant industry.  While not many details were released, you can read the Globe and Mail article, Taxman finds rampant restaurant fraud.

The media’s interpretation of the details that were released is a bit misleading.  Of the 424 restaurants that were subject to scrutiny, it was determined that 143 of them exhibited evidence of fraud by erasing evidence of cash sales from their electronic POS systems.  This is how they arrive at the “one-third” of all restaurants fraudulently hide sales from the taxman. Further, almost $1 million of hidden sales were revealed for each fraudulent establishment ($141 million).

So what’s misleading about that?

(more…)

Read Full Post »

Despite what has been published in the press and disclosed by the CRA and the Ministry of Revenue Quebec (MRQ), the use of zappers has not reached epidemic proportions in the restaurant industry.  Zappers have been around since the mid-1990s, though most of the usage seems to have been confined to Quebec.  In fact, the vast majority of the convictions for sales tax evasion have occurred in Quebec.  For background on the use and abuse of zappers, please read this, this, and this.  The unfortunate thing about all of this attention is that it may draw our attention away from a far larger threat to our operations.  The indirect audit approach.

(more…)

Read Full Post »

This post concerns the use of zappers in restaurant operations.  It is not a “how to” guide in their “proper” use, nor is it, in any way, an endorsement of their use.  In fact, if you are even thinking of employing a zapper to fill your pockets with cash stop and read this post.  It is not worth the risk.  You will get caught, eventually, and here’s why.

(more…)

Read Full Post »

Recently, we’ve begun to hear a lot more about tax evasion in the restaurant industry.  More specifically, we’re talking about technologically-assisted tax fraud, using zappers or phantom-ware.  It made the news, again this past week, when it was disclosed that the Canada Revenue Agency had found more than $40M of unreported tax in the restaurant industry attributed to the use of zappers.  Today’s post looks at the issue of tax fraud in the restaurant industry and tries to determine how “rampant” it might be.

While tax fraud can occur in many different ways, when we talk about the restaurant industry, it usually takes the form of cash sales “skimmed” off and not reported for tax purposes.

(more…)

Read Full Post »

Today’s Toronto Star ran an article about restaurants hiding cash income.  You can find it here:  Restaurant probe finds $40M in ‘phantom’ sales.

Until recently, most detective work surrounding the use of zappers had been focused in Quebec.  Now, we find out that the CRA has been involved in a two year, national probe of the restaurant industry.  So far, they’ve found about $40 million of unreported income, though they expect to find much more by next March when the study is completed.

(more…)

Read Full Post »

In a National Post article last December, CRA warns business owners on Tax Cheating Software, it disclosed that the CRA has dedicated 5,000 employees to the task of finding unreported income and ensuring that sales taxes are remitted properly, “even when sales records are missing.”  This is a thinly disguised warning to restaurants (and other cash businesses) that CRA is about to descend on your business, using indirect audit methods to identify unreported income and the sales taxes that should have been remitted.  The reference to tax cheating software refers to sales suppression software, also known as “zappers”.

(more…)

Read Full Post »

Older Posts »