The law banning ‘sales suppression software tools’ (Suppression Software) became operative on 4 October 2018 and the ATO posted advice about this on its website, the following day. Then, on 10 October 2018, it posted a more ‘breezy’, shorter and more pointed article. (See related Tax Technical article.)
It says that “these tools serve no purpose other than intentional tax evasion. They can be used to delete, change or falsify electronic point of sales (POS) records and are often referred to as ‘phantomware’ or ‘zappers’. “We know these tools are being used by dodgy businesses, and now that we have legislation passed that specifically sets out sanctions, we can also go after the manufacturers and suppliers. It is now illegal to manufacture, distribute, possess, use or sell electronic sales suppression tools (ESSTs). And, taxpayers can now face financial penalties of up to 5,000 penalty units, which currently equates to over $1 million depending on the offence and severity of the crime.
The ATO tried to assure businesses, using legitimate POS software, saying – we can tell the difference between a salesperson correcting an error when ringing up a sale and the deliberate manipulation of sales data.”
Perhaps of greater concern is taxpayers who have inadvertently bought the illegal software (as there’s no ‘intention’ test in the offence). The ATO says that they will be ‘working closely’ with those businesses. There is some limited ‘transitional’ relief for taxpayers who acquired Suppression Software before the legislation was first announced on 9 May 2017, and who advise the ATO, within six-months of the ban becoming effective: 3 April 2019.
“We will be sending letters to businesses who we believe may have an ESST in their POS system to inform them to take action.
CPD questions (answers available)
- Did the ban on Sales Suppression Software come into operation on 10 October 2019?
- Is such software sometimes known as ‘phantom ware’ or ‘zappers’?
- Can this software have a legitimate use?
- Is the maximum penalty 5,000 penalty units, setting a current maximum fine of $500k?
- Is there ‘transitional’ relief for those who have acquired the software before 9 May 2018 and report the software to the ATO by 3 April 2019?