Grenon – Federal Court of Appeal finds that a refund of tax paid to a taxpayer after reversal of a jeopardy order should bear interest

A taxpayer, who appealed a $200 million reassessment to the Tax Court, then received a jeopardy order requiring him to pay the assessed tax notwithstanding that it was still under appeal. He made a partial payment – but then the jeopardy order was reversed on consent.

Webb JA found that the taxpayer was entitled to interest on the refund to him of the partial payment. He was influenced by the fact that if this amount had not been requested to be repaid and the taxpayer’s appeal was successful, the taxpayer would be entitled to refund interest, whereas if he was unsuccessful, the Crown would collect interest on the partial repayment amount that in fact was made.

Neal Armstrong. Summary of Grenon v. Canada (National Revenue), 2017 FCA 167 under s. 164(1.1).