Toronto, ON – January 28, 2016 – VersaPay Corporation (TSXV: VPY) (“VersaPay” or the “Company”), received proposal letters (the “Proposals”) from Revenu Quebec (“RQ”) in which RQ is proposing to reassess VersaPay under various rules contained in the Excise Tax Act and the Quebec Sales Tax Act in relation to the Company’s 2008 to 2014 tax years (the “Relevant Taxation Years”).
The potential for the proposed reassessments has been anticipated and has been previously disclosed by the Company. The Proposals outline RQ’s positions that the Company owes GST/HST of $2.3 million (before interest) and Quebec Sales Tax of $1 million (including interest and penalty). The issuance of the Proposals does not require the Company to pay any amount to RQ at this time.
Failing a resolution at the Proposal stage, RQ may proceed to issue notices of reassessment for reporting periods falling within one or more of the Relevant Taxation Years. VersaPay is currently reviewing the Proposals. VersaPay has not recorded a liability in its consolidated financial statements for the proposed reassessed taxes payable described above. Management believes that the Company has filed its tax returns and paid applicable taxes in compliance with Canadian federal and provincial tax laws.
VersaPay intends to vigorously defend its tax filing positions and is now in the process of preparing its response to the Proposals. There is no assurance that the Company’s objections and appeals will be successful. If RQ issues notices of reassessment and is successful, VersaPay will be required to pay the taxes owing plus applicable interest thereon. The Proposal does not indicate the amount of interest or other penalties in respect of the GST/HST for the Relevant Taxation Years. Further, taxation years subsequent to 2014 remain open to audit by RQ.
“We are confident that we have complied with all tax laws in a manner consistent with others in the merchant services industry,” said Craig O’Neill, Chief Executive Officer of VersaPay. “We have sought a legal opinion on the matter and confirmed that our services have correctly been treated as tax exempt. Any attempt by Revenu Quebec to change this exemption, if successful, would apply industry-wide and as such VersaPay would be required to collect tax from our customers and partners. As a result, the direct tax liability to VersaPay would be marginal. We are confident of our position and will defend it vigorously.”
Should VersaPay receive a notice of reassessment from RQ based upon the Proposals, the Company intends to file a notice of objection within the required 90-day periods provided under the Excise Tax Act and the Tax Administration Act (Quebec).
VersaPay is a leading cloud-based invoice presentment and payment provider for businesses of all sizes. VersaPay’s ARC software-as-a-service offering allows businesses to easily deliver customized electronic invoices to their customers, to accept credit card and EFT payments and automatically reconcile payments to their ERP and accounting software. VersaPay is headquartered in Toronto, Canada and also has operations in Montreal.
For additional information, please contact:
|David CW Chan
Chief Financial Officer
Vice President, Marketing
647-258-9406 [email protected]
Virtus Advisory Group Inc.
Forward Looking and Other Cautionary Statements
This news release contains “forward-looking information” which may include, but is not limited to, statements with respect to the activities, events or developments that the Company expects or anticipates will or may occur in the future. Such forward-looking information is often, but not always, identified by the use of words and phrases such as “plans,” “expects,” “is expected,” “budget,” “scheduled,” “estimates,” “forecasts,” “intends,” “anticipates,” or “believes” or variations (including negative variations) of such words and phrases, or state that certain actions, events or results “may,” “could,” “would,” “might” or “will” be taken, occur or be achieved.
These forward-looking statements, and any assumptions upon which they are based, are made in good faith and reflect our current judgment regarding the direction of our business. Management believes that these assumptions are reasonable. Forward-looking information involves known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of the Company to be materially different from any future results, performance or achievements expressed or implied by the forward-looking information. Such factors include, among others, risks related to the speculative nature of the Company’s business, the Company’s formative stage of development and the Company’s financial position.
Forward-looking statements contained herein are made as of the date of this news release and the Company disclaims any obligation to update any forward-looking statements, whether as a result of new information, future events or results, except as may be required by applicable securities laws. There can be no assurance that forward-looking information will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements. Accordingly, readers should not place undue reliance on forward-looking information.
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