CRA INFORMATION REQUESTS - SHOPIFY 2
FEDERAL COURT DISMISSES CRA UNNAMED PERSON REQUIREMENT IN SHOPIFY 2
Among the most important decisions for GST/HST practitioners in 2025 were two Federal Court rulings dismissing applications by the Canada Revenue Agency (“CRA”) for unnamed persons requirements (“UPRs”) – a type of information demand in respect of an ascertainable group of unnamed persons that requires Court authorization – directed to Shopify Inc. (“Shopify”).
Below, we review the second of these two Federal Court decisions involving Shopify (Canada v. Shopify Inc., 2025 FC 969 – “Shopify 2”), in which the CRA failed to satisfy the requirement that the target group under its UPR be “ascertainable”.
For our review of the first Shopify decision, click here.
Background
On the facts in Shopify 2, the Minister of National Revenue sought a UPR requiring Shopify to provide information about Canadian merchants for the purpose of auditing income tax compliance and the reporting of online sales.
The UPR specifically targeted information relating to Shopify merchants who gave a Canadian address when registering for a Shopify account and who had sold and/or leased products or services using Shopify (“Merchants”). The draft UPR also sought information relating to persons “associated with” the Shopify merchant accounts.
Under subsection 231.2(3) of the ITA (and parallel subsection 289(3) of the ETA), UPRs must be approved by the Federal Court, and will only be granted where two conditions are met:
- Ascertainable Target Group: The target group of the request is “ascertainable”; and
- Compliance with the ITA (or ETA): The purpose of the UPR is to verify compliance with any duty or obligation under the Act.
The key issue before the Court was whether the UPR target group was “ascertainable”.
Federal Court Decision
The Federal Court determined that while the term “Merchant” as defined by the Minister was ascertainable, the request for information relating to persons “associated with” the Merchant accounts introduced an inconsistency in the Minister’s narrower definition of “Merchant”. It was therefore unclear whether Shopify was required to provide information about Merchants or persons “associated with” an account – a broader group that could include store owners, account owners, and designated representatives.
The Court noted that this uncertainty created real risks for Shopify. The company could face contempt proceedings under s.231.7(4) (or s.289.1(4) of the ETA for comparative purposes) if its response was underinclusive, while also risking breach of contractual obligations if it disclosed information on those not targeted by the CRA’s demand.
On that basis, the target group was held not to be ascertainable.
The Federal Court also noted that had Shopify been forthcoming in its communications with the Minister, the Minister may have amended the UPR accordingly, potentially avoiding significant litigation costs, of which Shopify recovered less than 10%.
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Takeaways
With both Federal Court Shopify decisions currently under appeal, it remains to be seen whether the Court’s restrictive interpretation of the CRA’s UPR powers will stand – and whether Parliament may move to expand those powers through legislation.
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