Revenue minister challenges policy to delete information from inactive accounts
The Federal Court of Appeal granted an order for the preservation of specific data and for the appeal to proceed on an expedited basis until the final disposition of an underlying appeal relating to the tax compliance of Shopify users.
In Canada (National Revenue) v. Shopify Inc., 2025 FCA 232, the minister of national revenue requested the Federal Court’s authorization in spring 2023 to require Shopify to provide information on some users of its software platform to sell products and services online.
The minister cited s. 231.2(3) of the Income Tax Act, 1985, and s. 289(3) of the Excise Tax Act, 1985, which allowed a Federal Court judge to authorize the requirement if they found that there was an ascertainable group, and the requirement sought to verify the tax compliance of those in the group.
The minister alleged that he wanted to verify whether unnamed individuals in an ascertainable group of merchants complied with their duties and obligations under the Income Tax Act and the Excise Tax Act.
The Federal Court declined to authorize the minister’s proposed requirement upon determining that it was unworkable, disproportionate, and had vague and confusing terms, which meant that there was no ascertainable group.
The minister appealed to the Federal Court of Appeal. In November 2025, after serving and filing his memorandum of fact and law, the minister moved to preserve data to verify compliance with tax legislation.
The minister challenged Shopify’s privacy and data retention policies, specifically its policy of deleting data from inactive accounts after two years. According to the minister, he wanted to obtain information from six years prior to the date when a court might authorize the proposed requirement, and deleting data from inactive accounts would result in the loss of the information sought.
Later, the minister moved ex parte for an interim order under rr. 374 and 377 of the Federal Courts Rules, SOR/98-106, to preserve evidence in Shopify’s possession, including information regarding inactive accounts.
On Dec. 3, 2025, the Federal Court of Appeal issued an interim preservation order. Before its expiry, the minister served and filed a notice of motion seeking an order under rr. 3, 373, 374, and 377 to renew the interim order, as well as an order under rr. 373 and 377 to require Shopify to preserve some data until the final disposition of the minister’s appeal (second preservation order).
Shopify contended that the minister improperly obtained the interim preservation order by moving ex parte without justification and by failing to make full and frank disclosure. Opposing the motion for the second preservation order, Shopify alleged that it did not meet the applicable legal criteria.
Data preserved
The Federal Court of Appeal granted the second preservation order after varying its scope and terms.
First, the appeal court determined that the minister met the low threshold for a serious issue for trial because his appeal was not frivolous or vexatious. The appeal court rejected Shopify’s argument that the second preservation order was mandatory and subject to a higher threshold.
The appeal court described the second preservation order as substantially requiring Shopify to refrain from deleting data, rather than requiring it to take any specific action. The appeal court likened this to the requirement to refrain from deactivating software, which a court has previously deemed prohibitive.
Second, the appeal court ruled that the minister, as guardian of the public interest, would suffer irreparable harm if he did not secure the second preservation order.
The appeal court added that Canada’s society had a legitimate interest in the minister’s exercise of his statutory mandate to verify compliance with tax legislation, which would suffer irreparable harm upon the deletion of data potentially relevant to confirming such compliance.
Third, the appeal court concluded that the balance of convenience favoured the public interest and the issuance of the second preservation order. The appeal court explained that adapting the order’s terms and expediting the appeal hearing would limit the harm Shopify would allegedly suffer if the minister were to obtain the order.
