Shopify CEO Vows to Fight CRA Demand for Six Years of Canadian Merchant Records

Shopify CEO Tobias Lutke participates in the company's annual general meeting of shareholders in Ottawa on May 29, 2019. (The Canadian Press/Justin Tang)

E-commerce giant Shopify plans to fight a Canada Revenue Agency (CRA) demand for six years of records from more than 121,000 Canadian merchants that work with the platform to build online stores.

“I don’t particularly want a fight with the CRA (Canada’s tax authority)- but we got asked to backchannel them 6 years of records for all Canadian Shopify stores,” said Tobi Lutkey, Shopify’s chief executive officer, in a tweet on June 23.

“This feels like low-key overreach to me. We will fight this,” he wrote.

In May, Shopify Inc. announced that it would cut its staff by 20 percent and sell the logistics component of its business to a supply chain management company, to focus more on its e-commerce objectives.

The Epoch Times sent a request to Shopify for comments but did not hear back by press time.

CRA spokeswoman Hannah Wardell told The Epoch Times via email on June 25 that the tax-collecting agency “uses the information obtained through Unnamed Persons Requirements (UPRs) to identify taxpayers that may have been non-compliant, and verifies that they have appropriately reported their income and have satisfied their filing obligations under the Acts administered by the CRA.”

She said the “CRA takes the security and privacy of all taxpayer information very seriously.”

“We collect information where it is lawful and directly related to compliance activities. Information collected through the UPR process is managed and protected according to CRA’s standard practices to protect the privacy of personal information.”

Due to the confidentiality provisions of the acts administered, the CRA said it cannot comment or disclose taxpayer information.

“The CRA must obtain judicial authorization before issuing a requirement to a third-party to get information about one or more unnamed persons. Publicly available information on this case may be obtained through the courts, as the application is governed by the process set out in the Federal Courts Rules.”

Tax Collector

According to a search of Federal Court records, the minister of national revenue filed an action against Shopify with the court on April 14, 2023, citing sections of the Income Tax Act and Excise Tax Act.

Some tax experts suggest that Shopify has data on its customers’ businesses that include “what was sold, when it was sold, their sales and revenue,” which would provide CRA with everything it needs to audit those businesses instead of looking for vendors on the platform and auditing them individually, reported Toronto Star.

In 2017, online payments giant PayPal was ordered to hand over data to CRA about its Canadian business account holders. PayPal said on its website that CRA obtained a Federal Court order requiring it to disclose information within 45 days about account holders and the amount and number of payments sent or received through the platform between Jan. 1, 2014, and Nov. 10, 2017.

At the time, a CRA spokesperson said the agency requested the information in order to ensure tax compliance under the Income Tax Act, saying that the agency was using third-party data to detect unreported economic activity and identify individuals and businesses not filing tax returns. The court order applied to all account holders including those whose business account had been closed, PayPal said.

The CRA in 2008 made a similar request to online auction site eBay, requiring it to provide the names and gross sales figures for so-called “power sellers,” referring to eBay sellers who make more than US$1,000 a month in sales over three continuous months on the site. At the time, many eBay users complained that they were selling used goods or old clothes and had already paid tax when they originally purchased the items.

The Canadian Press contributed to this report.