Shopify, a prominent Canadian technology success story, has successfully fought off the legal challengers in court. The federal court rejected the Canada Revenue Agency’s demand for millions of merchant records. Judge Guy Régimbald ruled that the CRA cannot access more than six years of records. This finding only applies to Shopify’s Canadian merchants.
The CRA made a concerted effort to obtain further, granular information directly from Shopify. Specifically, they sought Shopify ID numbers, types of stores on the platform, activation and closure dates of accounts, and the volume and value of transactions during the defined period. The agency wanted to ensure that Canadian businesses were complying with the Income Tax Act and the Excise Tax Act.
Shopify contended that the multilateral tax treaty on which CRA relied had “no domestic force. In practice, they said it didn’t apply when it was time to actually release information about specific, unnamed individuals. This claim had a significant impact on the resulting court decision. It raised significant questions about privacy and the scope of information that can be requested without a valid, specific justification.
In granting Shopify’s motion, Judge Régimbald ruled that the CRA had not sufficiently justified its request to access the merchant records. In addition, he directed the CRA to pay $45,000 in attorney’s fees for each of the two cases, $90,000 altogether. This decision reaffirming the need to protect business proprietary data and privacy rights, especially as the marketplace goes more digital, is critical.
Even behind the CRA’s heavy-handed request, was reasonable intent to ensure that Canadian-based merchants were paying their fair share of tax. Nevertheless, the ruling sets a dangerous precedent that limits the scope of governmental authority to access private businesses’ information without just cause.
