Shopify asks Federal Court to stay CRA’s new request for merchant information

Shopify Inc. SHOP-T is asking the Federal Court to temporarily halt a fresh attempt by the Canada Revenue Agency to access information about its merchants, the latest in a legal saga balancing government access and consumer privacy.

In a stay motion filed Wednesday night, Shopify called on the court to halt a new application filed by the CRA seeking information about stores linked to Canadian addresses. The company called the CRA’s request “a waste of judicial resources” in light of the parties’ parallel case before the Federal Court of Appeal, which is due to be heard in less than four months.

The CRA has said its new request – known as an unnamed persons requirement, or UPR – is necessary as it seeks new information covering a different timeline than the case before the appeal court.

The legal sparring is the latest in a multiyear court battle that began in 2023, when the tax agency first sought access to six years’ worth of data about merchants – including personal, contact and financial details – to verify tax compliance.

Last May, a federal judge dismissed that application, calling the CRA’s request overly broad. The CRA appealed that decision last November, and the hearing at the federal appeal court is scheduled for early December this year.

Despite that continuing proceeding, in June, the CRA opened a new Federal Court case, once again seeking information from Shopify.

Investor alleges $4.5-million in losses owing to fraudulent trades in TD investing accounts

In its Wednesday night filing, Shopify asked the Federal Court to temporarily stay the new application until the appeal case can be heard, saying this new application is “duplicative” as it seeks “substantially the same relief.”

If the new application is not halted, the company said, it would be required to respond to overlapping cases in two courts at the same time.

“The CRA chose to appeal, so it should let that appeal be heard, not pursue a parallel do-over that recycles evidence from the case it lost,” Shopify spokesperson Elka Looks said in an e-mail on Wednesday.

“Running the same fight twice abuses the judicial process and wastes court time and taxpayer money. We’re asking the court to stop it,” Ms. Looks said.

The CRA declined to comment on why it had opened a parallel case, citing the confidentiality provisions that govern the Income Tax Act and the Excise Tax Act.

However, in a letter to Shopify filed as part of proceedings, counsel for the CRA said it was necessary to launch the new application as the request relates to a different period of time, covering the start of 2020, a period of rapid e-commerce growth. The agency said the new application concerns details that are “nuanced and differ somewhat” from those previously requested.

Mike Moffatt: Shopify co-founder’s idea that pensioners be excluded from voting is offensive. The concern behind it isn’t

Shopify and the CRA are also at odds over whether a new preservation order – a legal directive to retain records – is required.

The information that the CRA is seeking, Shopify said in legal filings, is already subject to a preservation order, which was approved by the appeal court last December.

However, the CRA said the different information requested as part of its new application requires a new preservation order. It is also seeking transaction information, which was not covered by the last order, it said.

“To the extent there is overlap, the Minister does not accept that this would affect its ability to proceed with the fresh application or justify a refusal to preserve relevant information,” said counsel for the CRA in their letter to Shopify.

The case is playing out after months of debate around Canada’s proposed Lawful Access Act, or Bill C-22, which if passed would give police and the country’s spy agency more powers to track suspects online.

Public Safety Minister makes changes to lawful access bill

The government has argued the proposed legislation will ensure law enforcement agencies have the right tools to carry out investigations. However, civil-liberties advocates and tech companies, including Apple, Google and Meta, have warned that the bill could compromise cybersecurity and users’ privacy.

The initial dismissal of the CRA’s case by the Federal Court is a divergence from legal precedent. Since the rise of online e-commerce in recent years, the CRA has made similar requests for data from other online platforms and has been granted access to that data in several instances.