On May 29, 2025, the Federal Court (the Court) issued two decisions in Canada (National Revenue) v Shopify Inc., 2025 FC 968 and Canada (National Revenue) v. Shopify Inc., 2025 FC 969 (together, the Shopify Decisions).1
The Minister of National Revenue (the Minister or the CRA) filed applications with the Court in 2023 requesting information from Shopify Inc. (Shopify) about unnamed persons transactions, which Shopify opposed, leading to the Court's decisions in May 2025.
In both cases, the Court rejected the applications that would have imposed a requirement on Shopify to provide documents or information about its customers.
Key Takeaways
Both cases reaffirm the broad powers of the CRA to investigate, verify and test taxpayers' compliance. While intrusive and inconvenient, a "Unnamed Persons Requirements" (UPR) is a permitted form of a "fishing expedition" that is intended to allow Canadian tax authorities to test compliance with federal tax laws of Canada.
- Judicial Oversight Is a Crucial Safeguard
- The Court emphasized its gatekeeping role in reviewing UPR applications. It underscored that judicial authorization is not a formality but a substantive check on the CRA's investigatory powers, especially when privacy and third-party burdens are at stake.
- Requests Must Be Tailored and Justified
- The Court criticized the CRA's requests for being overly broad and insufficiently justified. It stressed that the CRA must demonstrate necessity and proportionality particularly when requesting large volumes of data from third parties like Shopify.
- Terminology Matters: Precision in Language Is Essential
- In Shopify #2, the Court found the CRA's use of terms like "Shopify Owner" and "merchant" to be ambiguous, which undermined the ascertainability of the target group. This highlights the importance of clear and consistent terminology in UPR applications.
- Feasibility and Administrative Burden on Third Parties
- The Court considered the practical implications of compliance for Shopify, including the technical and resource burdens of extracting and producing the requested data. This reinforces that feasibility is a relevant factor in judicial discretion.
- CRA Must "Connect the Dots"
- The Court reiterated that the CRA must link the requested information to a specific compliance objective under the Income Tax Act (ITA) or Excise Tax Act (ETA). Vague or speculative justifications are insufficient to meet the statutory threshold.
The Court emphasized that the...
