CRA likely to see past six years of Shopify merchant tax records

THURSDAY, JUNE 29, 2023

The CRA has requested the past six years of merchant tax records from Shopify, with the Minister filing a Notice of Application in April.

While the CRA does not have approval yet, they likely will in the near future. The federal court will approve if:

1) The group of people are ascertainable (which they are)

2) They are requesting the information to verify tax compliance

The CRA’s request meets the requirements, so although Shopify has made some noises about objecting, they will likely receive a court order.

If you’re a Shopify user and have been compliant with paying taxes, there should be no issue. For those who have not, they should look at filing and paying all the taxes they should have been, with two types of tax at play:

1) Income tax on earnings

2) GST/HST on sales

There is a ‘Voluntary Disclosure Program’ (VDP) where you can voluntarily submit all the information and updated returns and CRA could waive some interest and penalties. To be eligible for the VDP program, your submission has to be ‘voluntary’. CRA has requirements on what that means. There is grey area, but for many people it will be the smartest course of action.

Keep in mind, CRA can reassess a return up to three years after an assessment, unless there was a misrepresentation or gross negligence from the taxpayer. Six years of documents have been requested from Shopify.

Also worth considering if you have been utilizing Shopify is whether you’re incorporated or not. Incorporating is a great way to defer tax and lower your tax burden in the short-term by as much as 38%.

Bottom line, if you have been running your business with Shopify or any other online platform and ignoring tax obligations, you should be figuring out your next steps.

 Please reach out if you have any questions.