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Court Documents Show CRA Wants Shopify Customers’ Banking, Sales Data

An affidavit lists 16 categories of information the CRA seeks, from client bank account information to dates of birth and Social Security numbers.

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OTTAWA – The Canada Revenue Agency and Shopify are locked in a year-long court battle, as new court documents detail the broad scope of data the tax agency wants to extract from the e-commerce company about its customers to check whether they have paid everything. your taxes.

The new documents are the latest step in the CRA’s ongoing battle with the e-commerce giant on its own behalf and on behalf of the Australian and French governments to obtain large amounts of business information from Shopify.

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An excerpt from a 2023 affidavit by CRA senior technical analyst Paul Kalil lists 16 categories of information the government seeks about Canadian Shopify account owners, ranging from their bank account information and total value of the transaction each year up to the owners’ birth dates and social security numbers. .

Last year, the CRA filed two applications in Federal Court asking that Shopify be forced to hand over data. The first request, called the anonymous persons requirement (UPR), seeks broad information, such as the identity, transaction records and sales amounts of Canadian-resident merchants who used the e-commerce platform in the past six years.

The second UPR was filed on behalf of the Australian Taxation Office, which is seeking data on all Shopify merchants with billing addresses in Australia between April 1, 2021 and March 31, 2022.

Even though a UPR is a legal tool that the CRA can use as long as your request meets certain criteria and is approved by a judge, Shopify’s COO last year accused the agency of trying to obtain information through a “backchannel” at the time and vowed to fight. “scandalous” requests.

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A year later, both UPRs are wandering very slowly through the Federal Court as both sides argue over what data Shopify can or cannot provide to the tax agency in a reasonable time.

Much of the non-financial information, if successfully obtained, will likely be used to cross-check store owners’ information with CRA files to then verify whether those merchants reported all of their business income to the government.

The UPR filed on behalf of the Australian government is less comprehensive and only seeks eight categories of information, such as the legal name of a Shopify store, contact information, postal and email addresses, as well as total revenue from sales to customers in Australia .

But in both cases, Shopify argues that it does not store much of the requested information.

“For almost all store owners, the information requested in the Canadian UPR is not available to Shopify in its tax ‘books and records’ or otherwise,” reads an affidavit from Shopify’s vice president of product, Mani. Fazeli.

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More specifically, the company says it does not have all the data in 13 of the 16 categories of information on Canadian merchants that the CRA wants. He says extracting all the requested information that he does have would be an extremely expensive and time-consuming task because it would involve manually reviewing “hundreds of thousands” of accounts with a Canadian address.

“Overall, it would be extremely cumbersome and time-consuming for a regulatory analyst to perform the manual review of the documents and information necessary for Shopify to respond to the Canadian UPR,” Shopify regulatory analyst Anna Lee wrote in a recent affidavit.

It also says it does not have three of the eight categories of information requested by the Australian government.

But the CRA has said it doesn’t believe the company.

In a recent filing asking the Federal Court to overrule Shopify’s objections to answering precise questions about a data recovery software it uses, called Mode, the agency’s lawyers questioned whether the company couldn’t, or simply wouldn’t, provide the requested information. information at the UPR.

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“Shopify says it has limited information. “Modo’s questions test this position,” the agency wrote.

“Knowing what information Shopify was able to recover through its custom Mode reports would help the Court understand the scope and types of information that Shopify collects, maintains, and provides in response to legal information requests, and whether this information is associated with an individual.” or identifiable company.”

Court documents also reveal that CRA and Shopify officials had multiple email exchanges and at least one in-person meeting to discuss what information the company had about its customers before the agency filed its UPRs.

The CRA did not provide any comment on the ongoing litigation by Thursday’s deadline. Shopify did not respond to emailed questions Thursday.

Last year, National Post reported that the agency’s requests to Shopify are part of a larger effort to fight tax noncompliance by taxpayers who make money operating a business on e-commerce websites.

The documents also showed that CRA auditors who focus on high-net-worth individuals and companies had received requests from French and Australian tax authorities for information on Shopify merchants. The documents said the governments of both countries were auditing unspecified Shopify merchants, as well as the company itself.

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Recent court filings show that the Australian Taxation Office (ATO) contacted Shopify directly in late 2022 to request data on its merchants with Australian addresses, but the company refused to provide any information without a valid court order. That was what forced the ATO to turn to the CRA to obtain the data through a UPR.

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