British Columbia’s Court of Appeals ruled yesterday that it was not illegal for a local software company to market software that allowed users to under report their sales to revenue agencies.

InfoSpec Systems Inc. of Richmond, B.C. landed in trouble back in 2000 when the Crown charged the company with fraud over $5,000, four counts of evading income tax and four counts of evading the goods and services tax after InfoSpec sold its product to two Winnipeg restaurants.
In 2012, the B.C. Supreme Court ordered InfoSpec to pay a $100,000 fine for helpign businesses evade taxes. The company subsequently appealed the ruling.

InfoSpec developed and sold a point-of-sales software called Profitek that helps clients monitor their sales. The company also offered customers a product known as a zapper. The software allows users to select and delete transactions from their records. This allows them to under report income.

InfoSpec was initially convicted only of the fraud over $5,000 charge but the company appealed the conviction arguing that sale of a software that that helps a third party commit fraud in not fraud itself. The company also said the Crown failed to prove that its software was actually sold.

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In the three-panel court ruling on Wednesday, Justice David Frankel said the Crown could not prove amount of alleged fraud. He also dismissed a later bid by the Crown to convict InfoSpec of attempted fraud.

Frankel also said the zapper software itself is not illegal and that he wasn’t even sure if reasonable people would ever consider its sale to be dishonest.

He said it is up to parliament to consider a prohibition of zapper-type software.

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