Federal Court says CRA failed to define merchant group in bid to access Shopify records
A Federal Court ruling has blocked the Canada Revenue Agency’s (CRA) attempt to obtain six years of detailed data on Shopify Inc.'s Canadian merchants, citing the agency’s failure to identify a specific group of individuals.
According to The Globe and Mail, Justice Guy Régimbald found the CRA’s request too broad and inconsistent to meet the legal threshold under the Income Tax Act.
The CRA had sought records to verify whether merchants using Shopify’s platform were compliant with both the Income Tax Act and the Excise Tax Act.
As reported by BNN Bloomberg, the agency requested names, social insurance numbers, dates of birth, addresses, phone numbers, bank account details, Shopify ID numbers, account activity status, and detailed transaction volumes.
According to an affidavit filed by a CRA employee, the agency suspected that some merchants were participating in the underground economy and failing to meet their tax obligations.
Under the Canadian Income Tax Act, any request for data about unnamed individuals must identify an “ascertainable” group.
The court concluded the CRA had not met this requirement.
In the ruling, Régimbald stated that the CRA’s “inconsistent use and scoping of the terms employed in their request” rendered the proposal “ambiguous and unworkable.”
He added that the court would not entertain a request for information that was “unintelligible, incoherent, or otherwise beyond its understanding.”
The decision follows a two-year legal battle launched in 2023, when the CRA first filed for court authorization to compel Shopify to hand over the information.
Shopify opposed the request, arguing the agency’s definition of merchants was overly broad.
The company also challenged a separate CRA request to share merchant data with the Australian Tax Office, stating the multilateral tax treaty used “is without domestic force” when dealing with unnamed individuals.
As part of the ruling, the court ordered the federal government to cover $45,000 of Shopify’s legal costs for each of the two applications, totalling $90,000.
The CRA and Shopify did not issue public comments immediately after the ruling, though Shopify CEO Tobi Lütke later posted on X, calling the CRA’s actions “blatant overreach.”
CRA spokesperson Sylvie Branch told BNN Bloomberg that the agency is currently reviewing the court’s decision and the associated information.
While Shopify offers compliance tools to help merchants calculate taxes owed, it is not responsible for collecting or remitting those taxes to the government.
